FAQs About IRS Tax Debt

Nothing is certain but death and taxes. Owing debt to the IRS is intimidating and stressful, but it is not necessarily permanent. There are ways to cut down and realistically repay the money you owe. Below are answers to some frequently asked questions about IRS tax debts, and how to best handle them.

Q: If you owe a large amount of money to the IRS and cannot realistically repay it all in your lifetime, what do you do?

A: If the amount of money you owe is so substantial that is mathematically impossible for you to pay it all back, the IRS is most likely willing to settle for a lesser amount. It is called an "offer in compromise." If you can prove to the IRS that the amount you owe them is impossible to pay, you can drastically cut down on your debt.

Q: If you could not pay your taxes due to a compelling reason beyond your control, can you get leniency?

A: Yes, if you were unable to pay your taxes because of an uncontrollable event in your life like theft, divorce, fire, debilitating illness, etc., check with the IRS to see if they can take credit part of the debt or the penalty fees. If they give a break on penalty fees, it is called "penalty abatement."

Q: If you want to pay back your debt, but there is no way you can produce the entire sum all at once, what do you do?

A: The IRS understand that most people do not make nearly enough money to pay their back taxes in one lump sum. As such, they offer a variety of payment plans to help deal with this issue.