What options could help address tax debt?

What options could help address tax debt?

On Behalf of | Oct 8, 2021 | Tax Law

Debt in any form can quickly go from a slight hindrance to a serious problem. If Colorado residents have tax debt, they may feel even more pressure from their outstanding liabilities because they worry that the IRS will take action against them. Unfortunately, that could happen if taxpayers do not take steps to address their debt, but luckily, there are often options available for help. 

An outstanding tax balance is not an issue that will simply go away on its own. In fact, the IRS will likely make various attempts to collect the back taxes. If the taxpayer does not take action to address the matter after receiving notices from the agency, the IRS could begin garnishing the person’s wages in order to cover the debt. 

However, before that happens, the taxpayer could explore ways to get on top of the situation. Some options for addressing back taxes include the following: 

  • Applying for a payment plan from the IRS, which could be a short-term or long-term plan but will still accumulate interest and fees 
  • Applying for an offer in compromise that could allow the taxpayer to settle the outstanding debt with the IRS for an amount that is less than what is actually owed 
  • Applying for currently not collectible status, which could put collection efforts on hold but indefinitely 

Though these options may seem appealing and can certainly be helpful to struggling Colorado taxpayers, it is important to remember that applications must be filled out properly and then approved by the IRS. It can be challenging to fully understand these tax debt relief options, so it may be useful for interested parties to gain reliable information and assistance. Fortunately, experienced tax law attorneys could provide help to those struggling with back taxes.