If you are dreading filing your taxes because you just know that you will owe the IRS more money than you can possibly afford to pay, then you need to understand about several options that you might have available. There are some ways that you may be able to settle your tax debt and not lose everything you have in the process.
The first thing you should do, of course, is to file your taxes. Even if you can't pay the bill right now, prolonging the filing will only make matters worse. It IRS will just not go away and it is better to face what you might owe than ignore it altogether. You should know that you will begin to accumulate interest and penalties for not paying. If you do have a credit card, the IRS is more than happy to accept this as a form of payment. In fact, the interest charged on your card will probably be less than the interest and penalties charged by the IRS. So this may well be your best option.
Another choice you have is to work out an installment agreement. Because the IRS will want the money due, they are usually willing to work this out with you. Bear in mind that during this time your taxes due will continue to pile up late fees and interest. So pay the tax bill off as some as you can.
If there is no way you believe you will ever be able to pay your tax debt, then you may try to receive an Offer in Compromise or OIC. An OIC will reduce your bill. This is a hard status to obtain and you will probably need the help of a tax professional. To qualify, you must be able to prove that even if you liquidate all of your assets, you still will not be able to pay your debt. Another way to qualify is to show that making the required payments will not allow you to pay your daily living expenses. Also, if you have some other situation such as a medical condition that requires huge expense and you are unable to work, the IRS may grant you this status.
There is one other option for you which is a CNC or Currently Not Collectable status. This does not mean that your bill will go away. In fact, it will continue to incur interest and penalties. You will receive a tax bill on a yearly basis. If, after ten years, you still are unable to pay the tax, it will go away. However, if you do have a change in circumstances, then the IRS will expect you to pay the bill.
The IRS can be a terribly scary entity to face. You probably need to consult with a professional to guide you through the process and help plead your case to the IRS. However, it is important to face what you owe before, the IRS comes looking for you.
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