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Tax debt keeping you awake at night? You aren’t alone. A recent study found that nearly a million U.S. taxpayers are currently in debt to the IRS, with the average debtor owing over $50,000 in back taxes. And given the IRS’s enormous collection powers—wage garnishments, bank levies, and asset seizures, just to name a few of their tools—it’s easy to understand why owing the IRS could cause one to lose sleep. Thankfully, there are steps you can take to resolve your situation and mitigate the damage tax debt can cause.
According to Optima Tax Relief, the highest-ranked tax resolution company on the Inc. 5000, one of the biggest mistakes folks make when they fall into debt with the IRS is that they stop filing their annual tax returns. “The penalties for failing to file are generally worse than failure-to-pay penalties,” says an Opima representative. It’s important to note that being in debt to the IRS is not crime… but failing to file a federal tax return is. So even if you don’t have the money to cover your tax bill, you should still complete the paperwork side of the equation by submitting your tax return every year.
The next step is tackling the debt itself. Time is not your friend when you’re in debt to the IRS. The IRS is adding penalties and interest to your balance, so your debt is growing larger with each passing day. Delay paying them long enough, and they may garnish your paychecks or seize your bank accounts. So, ignoring your tax debt is not a winning strategy.
The best route forward is to begin paying it off as quickly as possible. The IRS offers a range of options designed to assist taxpayers struggling with back taxes. One a common solution is an installment agreement, where you agree to pay off your debt over an extended timeframe. Another option, if you meet specific qualifying criteria, is an offer in compromise (OIC). With an OIC, the IRS agrees to accept an amount that’s less than the full amount they were initially seeking.
As with all important financial matters, it’s critical to do your homework. A lot of helpful information can be found on the IRS’s official website, irs.gov. And many people, particularly those with significant tax problems, find it helpful to get assistance from a qualified tax professional. Companies like Optima Tax Relief have experienced tax pros on staff who specialize in helping people resolve their IRS debts.
Whether you choose to deal with the IRS directly or decide to get help from a credentialed tax professional, the keys to success are the same: keep filing your tax returns on time and prioritize paying off your debt as quickly as possible. Stay the course and you should finally be free of those sleep-depriving tax problems.