Do It Yourself Tax Debt Work
Can you tackle your IRS debt on your own? The answer to that varies according the amount of the debt and the taxpayer’s ability to pay. For example, there are five different approaches to working with tax debt:
* Partial Payment Plans
* Installment Plans
* Currently Not Collectible status
* Bankruptcy
* Offer in Compromise
Each of these approaches has different requirements and limitations and can provide the right solution for the right taxpayer.
Almost anyone can make arrangements to go on the installment plan on their own. Though this asks the taxpayer to make sure they have properly filed all of their tax returns, and take into consideration all of their tax debt relief, if someone is organized they can get on the installment plan. Additional considerations about the installment plan option include the fact that the debt must be less than $10,000 and the taxpayer must pay the amount due within three years.
So, how can you do this yourself? A visit to the IRS website will allow a taxpayer to download and print out a Form 9464, (alternately they can fill it out online and submit it that way as well) fill it out and then return it. The IRS will also accept telephone applications, but the individual will receive the forms to be signed in the mail and the plan will not proceed until they are returned. This process can completely automate the payments and see them deducted from the individual’s bank account each month. If, however, the taxpayer fails to file a tax return at any time during the three-year payment term, their arrangement can be cancelled.
Partial Payment plans usually require professional tax assistance because they will demand some negotiation with the IRS. This allows someone to agree to pay on their irs tax debt for a specific period of time (usually three to five years) after which the remainder of their tax bill is discharged. This too requires documents to be filed, including a Form 433-A. This plan requires the individual to show their income and expenses in order to determine a realistic figure to be paid. If they fail to file their taxes properly during the payment term, the IRS can void the arrangement and demand the full tax debt.
The only other option of the five that is a truly “do it yourself” approach is the Currently Not Collectible status. This is for people in financial hardship and if their income is less than their allowable expenses, the IRS will cease trying to collect the debt for a year. This can be renewed for the life of the debt (10 years) but is also capable of cancellation if the taxpayer fails to file properly.
