What Happens If You Owe Taxes and Are Unable to Pay Them?

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What Happens If You Owe Taxes and Are Unable to Pay Them?

What Happens If You Owe Taxes and Are Unable to Pay Them?

Tax time is never the most pleasurable part of spring, this is especially true for those who owe the IRS. This time can be even more appalling if you’re unable to afford the entire amount you owe. In fact, the IRS can assess a late payment penalty, or add interest on the balance due. Unfortunately, when this occurs, you’re left paying much more than originally stated. Continue reading to learn what you can do if it is determined that you owe taxes, but you are unable to pay them.

If you are experiencing financial struggles, you should contact our office. Our attorneys serve a wide area of Northeastern Ohio and can go over your bills with you to help determine if a debt relief program would be beneficial for you, or if bankruptcy would be the best choice.

Contact us today to set up a free consultation about your specific case.

I Am Unable to Pay My Taxes – What Options Do I Have?

If you are having difficulty paying your entire IRS tax bill at once, there are a few options available:

  • Get a personal loan or use a credit card to pay your tax bill – This option may seem unpleasant given that you would be trading one debt for another. Nevertheless, this choice should be considered, mostly if you are able to secure a credit card or loan with a low-interest rate. The interest and penalties the IRS charges may be considerably more than the interest you pay.
  • Ask for a payment plan from the IRS – You have the right to ask for a payment plan from the IRS. With a payment plan, you would pay off the tax debt in monthly payments with no worry of the bill being sent to a collection agency. A payment plan can be either short-term or long-term. There is no application for the short-term payment plan but form 9465 is offered for those individuals who require the option of long-term payments. This form can be obtained from the IRS. You need to be aware, however, while short-term and long-term payment plans can alleviate some stress, they do not save you from paying interest and penalties. Also, depending on the payment plan you choose, you may be charged a set-up fee as well.
  • Contemplate filing for bankruptcy – It is important to understand that your IRS debt may be eliminated in the bankruptcy. It can also remove other debt, freeing up your money so you have the ability to cover your tax obligations. If you have too much debt and are unable to move forward with your bills, filing for bankruptcy may be an ideal option for you. Much of your unsecured debt can be discharged when filing a Chapter 7 bankruptcy, leaving you with the ability to start over in as little as four months. When you file a Chapter 13 bankruptcy, your debts are reorganized. This allows you to make one affordable payment every month and pay off all your bills in only three to five years.

If you owe the IRS taxes and are unable to pay them, or if you are unable to afford any of your bills, call us right away. We will discuss all debt relief options available and help you choose your next steps.

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