You have a bad year financially, so you don’t pay what you owe, or worse yet, you don’t even file at all, thinking that next year will be better. The following year isn’t any better, so you fall behind even further with your income taxes in Texas. Eventually, the IRS catches up with you, but you still don’t have the funds. What can you do?

The IRS will work with you

The IRS has three collection alternatives to resolve an AIRS back-tax debt:

  • Installment agreement
  • Uncollectable status
  • Offer-in-compromise

To resolve your back-tax issues, you must achieve tax compliance, meaning that you must file and pay your income taxes for the past six years. Which alternative you select depends on your personal preferences.

Installment payments are a common solution. The IRS tailors installment agreements based on your ability to pay. If you are unable to pay, the IRS may deem your tax debt uncollectible. Not collectible status (CNC) status is usually temporary and will be revoked when your financial situation improves. The third alternative is an offer-in-compromise, whereby the IRS agrees to accept much less than the amount owed. The terms include an agreement to maintain your tax compliance for the next five years.

Are there other programs available?

While those are the most common programs, the IRS has other relief programs for back taxes. one of those is innocent spouse relief. If your current or former spouse failed to report income, reported income improperly, or claimed improper deductions or credits, the IRS may indicate that you are not liable. You would only be responsible for your portion.

Back tax debt is a serious matter, yet you usually can resolve it. The earlier you start examining your legal alternatives and achieve compliance with the IRS, the better.