What can you do if faced with attempts by the IRS, or by the State to collect taxes you are unable to pay in full? Several options exist, including offers in compromise, bankruptcy, and installment payment agreements.
Offer in Compromise: Under this option, the taxpayer petitions to be allowed to pay their taxes on a reduced basis. While the taxpayers Offer is pending, the IRS or State generally ceases its levy activity against the taxpayers property. The Offer in Compromise process requires submission of sufficient information for the government to determine the debtors assets and the net income which would be available to pay the taxes. We will review your tax debt situation to help you determine if offers in compromise will work for you. If offers in compromise is available for your unique tax debt situation, we will help you throughout this process.
Installment Agreement: Under this option the IRS or State of Minnesota and the taxpayer can enter into an agreement to pay the tax due over a period of time. Penalties and interest continue to accrue, however, no levies will be issued. If the tax cannot be paid in full under the plan during the colleciton period, at the end of the period, the taxpayer owes nothing with certain exceptions. When the tax due is less than $10,000.00 and the tax can be paid in full in three (3) years, the IRS is required to accept an installment plan.
Bankruptcy: Chapter 13 bankruptcy is an option which forces a repayment plan on the government. This repayment plan is determined by you and your attorney based on your budget and the amount of taxes owed. If the taxes due are income taxes and the time frame between filing of the bankruptcy petition and when the tax return was due, meets certain time frames, then a Chapter 7 bankruptcy might be available to wipe out the taxes. The law office of G. Martin Johnson can help you determine if a bankruptcy is appropriate for your situation.
If these three options will not work for your situation, there are several other options available to reduce tax debt.
First, the taxpayer can request that the IRS or state review his or her case to determine whether the tax is collectible. This might occur if the taxpayer has insufficient income to make an installment payment agreement. The taxpayer might not have assets from which the taxes can be paid. The IRS will usually put a stop in collection activity and revisit it in a year.
If one spouse did not know or have reason to know that there was outstanding taxes, in some situations the innocent spouse can be relieved from his or her obligations.
Litigating the liability can be considered if the taxpayer believes that the facts of the case or the law offers a chance to avoid the liability. This is obviously a very expensive process.
If you are struggling with unpaid taxes, let our office help you discover if offers in compromise, bankruptcy, or another option may be able to help you pay off your debt.
Ready for your fresh start? Contact Martin today!