We Know: How to Get Out Of IRS Tax Debt

What is IRS Tax Debt?

IRS tax debt occurs when an individual does not pay yearly taxes owed. This debt can build up over time and accrue interest. The IRS offers options if you find yourself buried by a debt you're finding difficult to repay.

What is the Taxpayer Advocate Service?

The Taxpayers Advocate Service is an IRS program designed to provide an independent system to insure that tax problems, which have not bee resolved through normal channels, can be promptly and fairly handled. The service offers several programs, and can represent your interests and concerns while protecting your rights. Generally, it is available to help taxpayers who:

  • are suffering a hardship
  • are facing immediate adverse action
  • will incur significant cost
  • will suffer an adverse long-term impact
  • have experienced a delay of 30 days or more in resolving an issue or have not received a response by a promised date

What is an IRS Installment Agreement?

If you can't pay the entire amount of your debt immediately, you can set up an installment agreement to pay in smaller, manageable chunks. For a small fee, the IRS will allow you to set up an installment program, based on the amount you owe and on your ability to repay within a set time period set by the IRS. Payments must be made on time or the agreement will be cancelled and collection actions resume. Interest still continues to accrue. Payments can be made by Direct Debit, an electronic transfer from your checking account, payroll deduction or check.

What is an Offer in Compromise?

If you're unable to pay your taxes in full, or if you are experiencing severe or unusual economic hardship, an Offer In Compromise (OIC) can help to reduce your debt. There is an $150 application fee. You can qualify for an OIC if you've exhausted all other ways to repay your debt, but still managed to pay your returns on time for the past two quarters, and have made deposits for the current year's payments. OICs can help reduce your debt loan by eliminating some interest charges, which still accrue even while the program is being evaluated. If your application is approved, your total tax liability may also be reduced.

Is there any Help for Disaster Victims?

If you have experienced a disaster, and the President has declared your location to be a disaster area, the IRS may grant you additional time to file returns and pay taxes. Call the IRS help desk or your local FEMA office for more information.

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