How do you recover when you owe the IRS thousands?

On Behalf of | Jun 13, 2022 | Tax Law

People may find themselves facing income tax problems for many reasons. Some people misinterpret tax law when filing their returns and underpay what they owe, possibly for years. Others hire incompetent individuals as their accountants. You could have fallen victim to a spouse who lied to you and on tax returns, or you may have failed to report certain income in the right category.

Any of these mistakes or oversights could mean that you owe quite a bit in unpaid income taxes. You might discover a tax issue on your own when you hire a new accountant or start reviewing your returns because of a divorce. Sometimes, you will discover the issue because you receive a letter from the Internal Revenue Service (IRS).

If it turns out that you owe thousands of dollars in unpaid taxes, you might panic. If you cannot pay all at once, will you end up going to jail?

You can negotiate a payment plan

Even those with substantial personal property can not immediately remedy years of underpaid tax obligations. The IRS recognizes that people do make mistakes and also that those with a large amount due for unpaid income taxes may not have the assets on hand necessary to pay those amounts in full.

You can arrange to make regular payments on the debt. You can potentially propose a payment plan for your past-due taxes. Typically, the IRS wants to see someone making a concerted effort to repay their text set, even if that puts pressure on other aspects of their budget. If you enter into an installment agreement, you won’t have to worry about other enforcement efforts, so long as you remain in compliance.

You may need help handling a large tax debt

Just because the IRS makes paperwork available on its website does not mean that the average person has the knowledge or focus necessary to handle negotiating with the IRS and addressing a substantial amount of past-due income tax.

If you were to attempt to handle that all on your own, you would need to learn tax law, learn more about your finances and brush up on your negotiation skills. Negotiating a payment arrangement and settling a tax issue may require support, but doesn’t necessarily have to mean immediate and lasting hardship.