Macco Law Group, LLP

Non-bankruptcy remedies may be available for those with tax debt

Non-bankruptcy remedies may be available for those with tax debt

While many types of debts can be discharged through the bankruptcy process, Long Island residents may be surprised to hear that tax debts are not one of them. However, there still are steps that those facing an overwhelming amount of tax debt can take to find debt relief.

First of all, even though getting a letter in the mail from the Internal Revenue Service can be initially distressing, don’t avoid opening it. The news it brings may not be as bad as you fear, and by opening your mail as soon as possible you can take prompt action to address your debt.

Second, file your tax returns, even if you believe you are unable to afford what you owe. Even after that, filing late is still a better choice to make rather than not filing altogether. There are penalties both for failing to file your tax return and for not paying what you owe. The sooner you file and start to pay, the fewer penalties you will incur.

That brings us up to payments. It may be possible in some circumstances to pay your tax debts over time. Depending on how much they owe, debtors can go online to the IRS website to fill out an application for a repayment plan. Moreover, debtors can always send the IRS a payment on their own during the process of settling their tax liabilities. Every little bit helps. In addition, sometimes the IRS and states offer tax amnesty programs that could be of help to debtors.

Also, it is entirely possible for a debtor to reach out to the IRS via mail or phone to discuss resolving his or her tax debts. The appropriate contact information can be found on the initial notice you received. Debtors can also contact the Taxpayer Advocate Service for help. This may be an option of the debtor hasn’t been able to reach a resolution with the IRS. The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service that aims to assist debtors who have not been able to resolve their tax issues on their own.

These are only some ways debtors can address tax liabilities. While filing for bankruptcy may not be an option, debt relief is available. Those who need more information about how to handle tax debts may want to work with an attorney.

Source: Forbes, “Get Out Of The Tax Debt Doghouse: 9 Tips For A Fresh Tax Start,” Kelly Phillips Erb, July 18, 2016