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What to do when You Have IRS Back Taxes

Anyone who's had some experience with IRS back taxes understands how much of a hassle it can be to get out from under that debt. It can be an utterly overwhelming circumstance when trying to get those back taxes off of your record. Indeed, being in arrears with your taxes is something that most people never want to experience. It can almost feel like a snowball effect in which the amount of taxes continues to compile over and over again. If you find yourself trying to evade that snowball time and time again, it might be time to look into a few options that might alleviate your debt.

Perhaps the most well-known way to help you out with your IRS back taxes can usually be found via the convenience of late night infomercials. You've probably seen these ads selling keyword phrases like "pennies on the dollar." Indeed, they suggest that they can virtually eliminate any back taxes that might be plaguing you for a fraction of the cost. They generally make this claim working under the idea that you can use an Offer in Compromise (OIC) to get out from under your debt. While this option works for some people, it will not work for everyone because there are certain qualifications that must be met. In any event, an OIC basically allows you and the IRS to reach a settlement in which you only have to pay a portion of the total amount due.

Another route you can take to reduce your back taxes is an installment agreement. This essentially allows you to make payments incrementally on your debts. Of course, this option brings up a few practical issues. If your total debts have accumulated to a rather large amount, then paying them off with small payments could take an incredibly long time. In this amount of time, it's feasible that you might incur even more tax penalties and be in an even worse predicament than before. In any event, using an installment agreement can work for some individuals who can afford to pay off the principal debt in a relatively short amount of time.

Some people might have heard about a few "tricks" when trying to avoid paying their IRS back taxes. For example, there is technically a valid period for the IRS to collect any back taxes. This period usually expires after 10 years at which point the IRS would have to quit seeking collection and the debtor would be entirely absolved. But, it's easy to inadvertently extend this period and it's more than likely that the IRS will file a lien and/or levy on your property. Others might think that bankruptcy will do the trick, but the only taxes that are wiped out by filing for bankruptcy are those that occurred within the previous three years. Although back taxes can certainly be a headache, it's a good idea to prepare yourself for the impending legal troubles you might find yourself in. You'll need to find exactly what works well for you when it comes to alleviating your debt.