Sometimes, people in Texas find themselves in a difficult financial situation. They may not be able to pay their taxes in full and on time. Luckily, there are options available to them. The IRS is open to several different ways to deal with back taxes: installment agreements, offers in compromise and uncollectible status.
Understanding the options
Paying installments on back tax obligations is one of the most common tax collection alternatives. This is easy to understand: People make partial payments over time until they are back in compliance with the IRS. In fact, this is so common that the IRS offers multiple ways for taxpayers to approach installment payments.
The next option when dealing with the IRS is an offer in compromise. This means that the IRS is agreeing to accept a settlement for less than what that particular taxpayer actually owes. For their part, the taxpayer is also agreeing to stay compliant with the IRS for the following five years. It’s important to note that the IRS will only make a reasonable compromise with a taxpayer and has a specific formula for determining what that means. Room for negotiation is fairly limited.
Finally, there’s uncollectible status. If someone owes over $10,000 that cannot be collected, the IRS will likely file a lien against their property. There is also temporary uncollectible status. This is known as currently not collectible, or CNC, status. Individuals or their accountants can ask for this status to give them some time to repair their financial situation before starting to make back tax payments again.
Getting a handle on your finances
Understanding these three options can help give you peace of mind if you’ve fallen behind on taxes. By doing your research, you may be able to decide on the best repayment method for you.