Tax season may appear to arrive sooner than some Arkansas residents prefer. Filing a tax return might not be a problem, but paying the tax balance could bring forth some concerns. Not everyone may be able to pay the obligation. Some tax bills are beyond what someone means at present. Thankfully, there are options available to those struggling with tax debt and concerns.
Remaining in compliance with tax rules and obligations
Some taxpayers may choose to avoid filing a tax return with intentions to deal with the matter in the future. Failure to file a tax return remains a crime, and not filing a return for several years and avoiding paying tax obligations could cause even more troubles. Such troubles might even be avoidable since the IRS provides solutions for people unable to pay their tax debts.
Not everyone is familiar with how to address late returns or unpaid balances. Taxpayers may not realize they could pay debts with a credit card. They might not realize the IRS will accept partial payments on the debt. Persons unable to file a tax return on time could file an extension. Doing so won’t eliminate failure to penalty and interest but would eliminate the failure to file penalty until the due date.
The IRS could also put a hold on collection actions with a “120-day payment plan” extension. Those unable to pay the debt off in 120 days could apply for a more extended installment agreement. Installment agreements come with more rules, and any tax obligation over $50,000 may require additional financial disclosures.
The offer in compromise plan
A tax debt could end up being far beyond someone’s ability to pay under any circumstances. An offer-in-compromise agreement could provide a way to settle the debt with the IRS. An offer-in-compromise involves the IRS accepting a reduced amount as final payment on the debt. The IRS would likely review someone’s ability to pay closely. A taxpayer with substantial assets may find the IRS less inclined to accept the offer.