The Internal Revenue Service is now juggling a backlog of millions in tax returns. As a result, it has temporarily suspended the distribution of collection notifications. However, this does not imply that those who owe money on their bills should put off paying their payments.
Because, according to Erin Collins, a National Taxpayer Advocate, a suspended notice does not necessarily imply that interest is no longer accrued on outstanding accounts.
During a hearing before the Senate Finance Committee on Thursday, she stated, “I was a strong supporter of shutting down the notices and suspending them.” “However, I want to make certain that those individuals are aware that interest is still accruing.”
As a result, she is pushing people to continue working towards paying off their debts, even though their payments are more difficult to avoid at the moment. At the time, it is difficult to get in touch with IRS representatives.
However, as Collins explained, they are “still prepared to collaborate with you.” For those among the millions who owe unpaid taxes, continue reading to find out about your options for resolving the situation.
Installment agreements are a convenient way to pay your taxes.
If you don’t have the cash to pay off your balance in full, you can apply for an installment arrangement, which means you’ll pay them off over a period of time that has been agreed upon by you and the lender.
You must not have any unfiled tax returns in order to qualify. Furthermore, you must owe no more than $50,000 in total, including taxes, penalties, and interest.
Erin Collins cautioned that you should think about your financial future before going this option, however, she did not elaborate. For example, if you are unable to pay future tax obligations, you will be in violation of the conditions of your contract. And doing so can lead to the emergence of a whole new set of issues.
Making an installment agreement, on the other hand, is “a very rapid process” that can be completed online, over the phone, or through a chatbot provided you are convinced that you will not have problems in the next years.
Make an Offer to Compromise to settle your debt and get your life back on track.
It is possible to make a compromise offer if you are unable to pay off your total debt in the foreseeable future. The IRS may agree to a lower settlement amount as a result of your actions. The agency, on the other hand, will need you to exhaust “all alternative payment methods” before proceeding.
“If you can demonstrate that you are experiencing financial difficulties, you may be able to decrease your tax due and settle it with finality, allowing you to put the tax behind you and go forward,” Collins explained.
To be eligible, you must be current on all of your tax returns (unless you have a valid extension on file). You must also be current on all of your existing tax payments in order to qualify. To see if you qualify for an offer in compromise, go to this page.
Obtain the status of ‘Currently Not Collectible.’
Your taxes may also be placed in a “currently not collectible” status, which means that the Internal Revenue Service will not attempt to collect your taxes for a period of time.
Your debts, on the other hand, will continue to accrue penalties and interest while you are in that state. Furthermore, if you are eligible to file returns in the future, the IRS will very certainly utilize the money to pay down your past dues.
In order to be eligible, you must file all of your past-due tax returns. Then you’ll need to fill out Form 433-A, Form 433-F, or Form 433-B, depending on your situation. In addition, the IRS will want a variety of papers to demonstrate financial hardship.