When you owe IRS back tax debt it can be stressful, and without knowing your options, it can be confusing. If you ever owe IRS back tax, here are a few options the IRS will suggest for you.
- Take Out a Loan
- Charge Your Credit Cards
- Seek Expert Tax Advice
It is important to know the benefits and risks of each of these options so that you make an informed decision when you owe IRS back tax.
Take Out a LoanThe IRS always suggests that you get a loan when you owe IRS back tax. This isn't bad advice. There are interest and penalty fees that are applied to your tax debt monthly, so paying your debt in full as quickly as you can is always best. Also, a bank loan may have lower interest rates than the penalties and interest applied to your IRS debt. On top of that, the bank may be easier to deal with if you start to have trouble repaying the loan.
This option is virtually off the table if the IRS has already taken specific collection actions like a bank levy or a federal tax lien.
This suggestion may not be an option when you owe IRS back tax if you have had either of these collection actions enforced, already have less than stellar credit, or are leveraged as far as the bank will allow.
- A bank levy is when the IRS seizes your bank account, wiping out anything you had in your checking or savings account. It is obvious to see why a bank may hesitate to approve a loan to someone that has had their bank levied.
- An IRS tax lien is made public and even though it doesn't affect your finances in the short-term, it can damage your credit in the long-term. Having a tax lien on your credit makes it extremely difficult to be approved for a bank loan.
Charge Your Credit CardsThe IRS may suggest that you charge your tax debt to your credit card. Some people may have a low interest rate credit card and could benefit from this option when they owe IRS back tax. However, a lot of people do not have a credit card, cannot be approved for one, or do not have the credit limit available to settle their tax debt in one lump sum. This would be an excellent option for those who have the credit and the money to make large monthly payments to the credit card company.
Even though many people do not have the luxury of borrowing money from the bank or putting a large amount on their credit card, there are still IRS payment plan options available when you owe IRS back taxes.
Seek Expert Tax AdviceThe IRS suggests you find expert tax advice when it comes to certain types of tax debt issues. A qualified tax professional will be able to put you in an affordable installment agreement and may potentially reduce your penalties or overall tax debt.
Sometimes it is hard to find expert tax advice when you owe IRS back tax. Here are a few helpful questions to ask when you are looking for a company to help you settle your tax debt when you owe IRS back tax:
- Does the company have qualified staff like enrolled agents or tax attorneys?
- Is the company registered with the BBB, and do they have at least a B rating?
- Has the company been in business for at least 10 years helping people who owe IRS back tax?
If the company has been in business for 10 years or more, has a B-rating with the BBB and has the staff that is required to help with you specific tax needs, you may have found a reputable company to work with.
If you are looking for a company to help you when you owe IRS back tax, fill out the form or call today. Every company in our network has the experience and expertise to assist you when you owe IRS back tax. Call today for a free consultation if you owe IRS back tax.