It is extremely stressful when you realize that you owe the Internal Revenue Service (IRS) money. With interest rates and penalties, that amount can grow substantially. However, there are several ways in which you can settle your tax debt and get out from under the IRS. Penalties for Not Paying Your Tax Debt If you are faced with an insurmountable tax debt and are worried about not being able to pay it and on time, that worry is justified. There are several options available to the IRS, along with the full backing of the United States government, to collect the monies you owe. Some of the penalties for not paying your tax debt include a tax lien placed on your home or property, a tax levy which allows for outright seizure of any assets you …show more content…
The IRS letter that you receive informing you of your tax debt will also explain how and when you must file an appeal. If you fail to file an appeal by the date has expired, you still have a few options such as audit reconsideration, offer in compromise or ask for an installment agreement. Audit Reconsideration Once you file your tax return, the IRS goes over it, thoroughly. The IRS has the power to change any information on your taxes that they feel you made an error on or have left out. Generally, the IRS has about three years to make those changes, although there are some exceptions. If you have unfiled tax returns, the IRS can change any of your information at any time. If you feel they made a mistake, you can ask for an audit reconsideration and if the IRS was wrong in the changes they made, they must fix it. Offer in Compromise The offer in compromise, also known as the IRS Fresh Start Program allows you to settle your tax debt for less than you owe, if you pay the reduced amount in one payment and the amount can be collected in a reasonable time frame. You will not qualify for an offer in compromise if you are able to pay the full amount through an installment agreement or if you have unfiled tax returns. Talking with a tax professional will help you determine if you are eligible for the Fresh Start