What Happens if You Can’t Pay Your Taxes?
Can you think of a more dreadful day on the calendar than the day you have to pay taxes?
While most Americans cough up what they owe, others have racked up $114 billion in back taxes, penalties, and interest according to the latest data from the IRS.
What happens if you can’t pay your taxes?
Well, there’s the possibility of stiff penalties, seizure of assets, and jail time, but somehow it continues to happen. April 15th rolls around and people don’t have the money to pay the unexpected and unplanned for the amount they owe.
Stick around and read this guide on the steps to take if you find yourself in a situation like this.
When you can’t pay your taxes on time, you have a few alternatives to keep you out of legal trouble. Let’s take a look.
Offer in Compromise (OIC)
An OIC is available for those who qualify. It’s for people who have few or no assets and have difficulty paying for necessary living expenses. It’s a settlement of your unpaid taxes for an amount less than what you owe.
The IRS takes your unique situation and circumstances into consideration when you apply to either approve or decline your application.
Do you owe money in back taxes? Or are you facing another type of tax issue? Learn more about the legal strategies used by these highly experienced tax attorneys. Get your issues resolved quickly and settle your debt.
File an Extension to Pay
You can file an extension with the IRS and get up to 120 days to pay your tax bill. You’ll use Form 1127 to request an extension for payment of the tax shown on your return or the amount you owe after your return has been examined.
You can spread out your payments with one of several payment plans. Depending on your situation, the plans range from simple agreements that you can set up to pay online in installments to more complicated options where you’re required to submit documents verifying your financial status.
Currently Not Collectible Status
Are you facing a financial hardship? If you can prove it to the IRS, you won’t have to pay your taxes until your situation improves. The IRS will suspend collection actions until your finances have recovered.
Have You Wondered What Happens If You Can’t Pay Your Taxes? Now You Know
Now that you know the answer to the question, “What happens if you can’t pay your taxes?”, you can take the action you need to work something out with the IRS. A tax lawyer or tax professional can help you formulate a plan to get on the right track.
Looking for more legal information? Bookmark our site for easy access to the most up-to-date legal news, information, and emerging trends in the legal industry. Find out more about the laws that affect your everyday life and get your legal questions answered.