Everybody knows that as responsible citizens of this country, there is the accompanying duty to pay taxes to the IRS (Internal Revenue Services). The IRS is the agency mandated by the law to collect taxes from its citizens and all goods and services under its jurisdiction.
However, it is also not surprising to know that there will be instances where taxes remain unpaid for a period of time. Too often, the tax debts get bigger compounded by the penalties and interest imposed. However, fret not because no matter how strict the IRS seems in implementing its mandate to collect taxes and impose penalties to erring taxpayers, there are still ways to amicably settle that embarrassing IRS debt. Through IRS debt settlement, tax debts can be paid off without necessarily becoming bankrupt.
Currently, there are five methods that you can use to settle IRS debts. There is the instalment payment option, the partial payment option, the compromise settlement option, the currently not collectible option, and petitioning for bankruptcy option.
In an instalment payment scheme, the taxpayer gets to choose what type of instalment agreement for which he is qualified. There is a monthly instalment plan, or a streamlined instalment plan, or a guaranteed instalment plan that can be availed of by the taxpayer, depending on the amount of the debt and the period for which the debt has become due.
A partial payment instalment scheme is an arrangement where the IRS allows a monthly payment of a tax debt at a longer term, after the IRS has taken into account the financial capabilities of the taxpayer.
Next we have the compromise settlement option. This is one where the taxpayer and the IRS agree to allow the tax payer to pay his debts in a reduced amount. This usually happens when the taxpayer agrees to a reduced lump sum payment or a short term settlement period, provided that he files and pays his taxes on time for the next five years, otherwise the offer for compromise will be revoked.
A currently not collectible scheme is a declaration made by the IRS that the taxpayer, after showing of due evidence, is unable to pay his tax debts. With this declaration, the debt collection procedures such as garnishment and attachment will be suspended and if at the end of the ten-year period for the statute of limitations the debt is not yet collected, the debt will be considered expired.
The last option in debt settlement is the declaration of bankruptcy. In this scheme, a petition for bankruptcy must be filed in accordance with the Bankruptcy Code. If there is a showing that the requisites in the law are fully complied with, complete discharge of tax debts shall be granted.
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