Almost 4 trillion dollars get collected by the IRS via mandatory taxes each year. What happens though if you have unpaid taxes? Can you let tax day come and go, not pay, and not deal with consequences?
The answer to that question is more than likely no. Chances are, the IRS has a file on you and will take notice if your tax payments stop coming in. That notice could result in punitive actions including a growing tab, wage garnishment, and more.
So then, what should you do if you’re in tax debt? Below, we share 5 steps that’ll help you answer that question.
1. Talk to a Relief Specialist
There are many groups out there that advertise their services as tax relief specialists. If you owe over $10,000 in unpaid taxes, it’s likely worth your time to consult them.
A tax relief specialist will look over your situation and negotiate on your behalf with the IRS to lower what you owe and to get a payment plan in place that makes sense. Part of the money they save you will be requested by them as their fee.
If you owe less than $10,000 in unpaid taxes, you’ll have a hard time getting interest from tax relief groups since their commissions would be prohibitively low.
2. Get in Contact With the IRS
Those of you that have missed tax payments for a while have likely been contacted by the IRS. After weighing the option of getting an IRS tax debt relief specialist’s help, if you’ve decided against assistance, give the IRS a call.
When you get a representative on the phone, they’ll walk you through what you owe, what the repercussions of not paying could be, and how you can get right with them.
3. Work Out a Payment Plan
Among the options the IRS will present you with will be a payment plan. Take whatever plan is offered that works with your needs. If nothing is being offered that you can afford, explain that to see if your IRS agent can offer additional flexibility.
Whatever plan you commit to, ensure you keep up with it. You’ll find that the IRS gets increasingly less forgiving the more you fall short on your obligations.
4. Get Budgeted for This Year and Beyond
Getting out of unpaid tax payments trouble is good news today. But what about tomorrow? Will you be back in the same postilion come next year?
To avoid a vicious cycle of working out payment plans, paying penalties, and more, work with a financial advisor to help you get your financial picture in order. Many advisors are offered free of cost through community groups or city resources for low-income individuals.
Ignoring Unpaid Taxes Is the Worst Thing You Can Do
As we’ve mentioned, there’s a good chance the IRS will notice if you have unpaid taxes. You ignoring their pleas to pay won’t make them go away. On the contrary, ignoring your obligations will only make your debt grow and could result in the IRS intervening on your life in a public way (putting a lien on your home, wage garnishment, etc.).
We hope that the steps we’ve shared help you move past your tax debt issues. If you’d like more guidance on how to deal with tax debt, explore additional financial content on our blog.
