Resolve Tax Debt

If you cannot afford to pay on your IRS back taxes at all, then you might be interested in Currently Not Collectible status with the IRS. To establish Currently Not Collectible status, you will need to prove to the IRS that your monthly income is exceeded by your monthly necessary living expenses. Thus, Currently Not Collectible status will require a disclosure of your and your spouse’s financial information. The IRS is typically only willing to place a taxpayer into Currently Not Collectible status once the taxpayer has filed all of his or her necessary federal income tax returns.

If you cannot afford to pay your back taxes at all, you may also qualify for an Offer in Compromise. An Offer in Compromise is a form of IRS back tax resolution. It requires the disclosure of extensive financial information in order to prove to the IRS that could not collect the full amount of back taxes the taxpayer currently owes. Specifically, the Offer in Compromise requires proving to the IRS that it could not collect your full back taxes over four (4) or five (5) years even if the IRS forced the sale of all assets that you currently own. The IRS is only willing to accept an Offer in Compromise once a taxpayer has filed all of his or her necessary federal income tax returns.

You may not need to do anything to resolve your back taxes. This is because the IRS only has ten (10) years to collect back taxes from the date on which they were assessed. Thus, if you know that you have back taxes or unpaid taxes from 1997 or older, the IRS may not be able to collect those taxes anymore. However, there are events that can occur that will extend this timeframe, such as bankruptcy, among others. To best ensure that your back taxes have expired, you may want to hire a tax professional to review your tax account with the IRS on your behalf. Through our Tax Account Review service, our office can contact the IRS to find out if you still have back taxes, the amount of those back taxes, and date in which they expire (a/k/a Collection Statute Expiration Date (CSED)). Tax Account Review can also tell you whether or not the IRS filed a federal tax lien or issued a levy (on income or a bank account).

Finally, you could resolve your back taxes through filing for bankruptcy. There are a number of factors that must be considered before back taxes can be discharged in bankruptcy. First, you need to qualify for bankruptcy. Second, you need to properly file the bankruptcy. Third, you need to examine the age and type of back taxes. In general, recently assessed federal income back taxes cannot be discharged in bankruptcy. Additionally, business-related federal payroll back taxes generally cannot be discharged in bankruptcy.