Tax Debt Solutions

There are two main forms of tax debt relief: government and private.

  • Government:

If the federal government is your creditor, you can try to get your taxes paid through an IRS payment plan or deferred action.

  • Private: 

If you owe taxes to a third party, such as an employer or state agency, there may be a way for you to settle your debt with them if they’re willing.

It’s easy to feel overwhelmed when thinking about your tax debt. You might have been making payments to the IRS, but then something happened that caused you to miss a payment or two. 

The first thing you should do before you start worrying is gathering all of the information you need. 

You will need to know how much money you owe in taxes, how much money you make per year, and whether there are any penalties for missing payments.

Once you have this information, create a budget for how much money you can afford to pay per month on your taxes with your income. 

Next, work out with the IRS to offer an installment agreement or other type of assistance with paying back your taxes. 

Finally, determine which kind of help is best for your situation before deciding what kind of help to take advantage of.

Steps You Need to Take To Manage Your Tax Debt 

Tax debt is a serious issue that can lead to penalties and even jail time if left unmanaged. Here are the steps you need to take to manage your tax debt.

1. Stop taking on new debt.

2. Prioritize your payments to the IRS. 

3. Request a hardship hearing.

4. Consult with a tax attorney to discuss available options. 

5. Consider an Offer in Compromise to avoid bankruptcy.

6. File late tax returns and/or file amended returns. 

7. Consider a settlement with the IRS for a lump sum payment. 

8. Use a credit counseling agency to negotiate an installment plan with the IRS, which will allow you to pay off your tax debt faster and save money on interest and penalties.

How to Recognize Tax Debt Solutions

Tax debt relief options are not the same, and it’s important to understand your options.

– A Chapter 13 bankruptcy can offer an option for tax debt relief if you can afford to pay back part of your debt. This type of bankruptcy will allow you to save your home and car, which would be lost in other types of bankruptcy filings.

– If you don’t want to file for bankruptcy, another option is a tax settlement. This is an agreement between you and the IRS where they give you a lump sum payment to settle all or part of your outstanding taxes.

– Another option is an offer in compromise (OIC). The IRS may accept this as a way to settle your tax debt if they deem that you won’t be able to pay back the full amount owed within a certain time frame.

Steps to Get Out of Tax Debt Using These Solutions

The process of getting out of tax debt can be separated into two parts: 

  • Installment Agreement: 

The first step is to contact the IRS and work with them on an installment agreement. You’ll need to fill out a form and provide specific information about your current financial situation and what you owe in back taxes. 

Once you submit the form, the IRS will review it to see if you qualify for this type of plan.

Once they approve your installment agreement, you will make monthly payments until the amount is paid off. This is one of the types of tax debt solutions that is best for those who can’t afford to pay their back taxes all at once but can make monthly payments without too much difficulty.

One type of arrangement is an interest-free Installment Agreement, which allows you to pay off your tax debt over time. The amount of each monthly payment is determined by using the IRS’ Financial Freedom tables and your Adjusted Gross Income

Each month’s payment is a small percentage of your total owed, but because it is spread out over time, most people find this option easier to manage than a lump sum payment. 

  • Offer in Compromise:

Another solution that could help you get out of tax debt is a qualified offer in compromise (QOC). This involves negotiating an agreement with the IRS, which allows you to settle your tax debt for less than what you owe. 

This program is designed to help small businesses and individuals with large tax debts. Under this program, the taxpayer offers a certain amount of money towards their tax debt and then proposes what they feel they can afford to pay on the remaining balance.

For instance, if a QOC program offers a settlement from $6,000 down from $10,000, then you would have $4,000 leftover after paying off your tax debt.

To be eligible for a QOC program, strict requirements must be met.

To be accepted for an offer in compromise, you must qualify under one of three categories:

  1. You must not have the ability to pay your entire tax liability because of your low income or high expenses.
  2. Your financial situation must be unstable, meaning that it will continue to deteriorate if you do not receive an offer in compromise.
  3. You must not have the financial ability to pay off your tax debt within five years through installment agreements or other payment arrangements.

To be eligible for an offer in compromise, you must also have no history of failing to file income tax returns or failing to pay your taxes when due.

You cannot submit an OIC or IA application without the help of a qualified representative such as a licensed attorney or enrolled agent. But once approved by the IRS, these plans require little maintenance on your part other than making timely monthly payments.

The Importance of Hiring a Qualified Tax Collector to Manage Your Debt

Hiring a qualified tax collector to manage your debt can save you a lot of money and time. They also know all the ins and outs of regulations and laws and can help you ensure that your debt is not too high.

When an individual or company owes more money than it has, they are considered in debt. One way to handle debt is by hiring a qualified tax collector as a debt manager, who will work with the individual or company on their current financial situation and find the right tax debt solutions for them.

How to Find the Right Debt Settlement Company for Your Needs

Your first consideration for tax debt solutions is to ensure that the debt settlement company is licensed in your state and has been in business for at least five years. You should also check that they are a member of the Better Business Bureau

There are many other reputable organizations, too, such as NACA, which also has a membership program. You can do an Internet search to see if the company is accredited or have any complaints filed against them.

The next step is to make sure that you get references from people who have previously done business with the debt settlement company and ask them about their experience with the company. 

If they have any complaints, now is the time to find out about it. 

Then when communicating with the debt settlement company, make sure that you communicate by email or telephone and keep a record of all correspondence between you and the company.

A good debt settlement company will be able to explain how they settle your debts by negotiating directly with your creditors or by using a combination of both methods.


Although these tax debt solutions offer something different, they all have the same goal: to help you get out of tax debt. With so many options available, you might be wondering which one is the best for you. 

There are a number of important tips you should keep in mind when dealing with IRS debt. The first is to never ignore your outstanding tax debt. 

Ignoring it won’t do anything to make the problem go away and may cause the IRS to issue some very unpleasant penalties.

If you are having trouble keeping up with your tax debt, there are a few steps you can take to get back on track. These are the tax debt solutions we have been talking about.

The first is to hire a professional to help you sort through your financial situation and find the best solution for your tax debt problems. 

Another step you can take is to work with the IRS directly; this may require making arrangements for an installment plan or some other form of temporary relief from the IRS enforcement division. 

Even if you and the IRS can’t agree, this will still give you more time to get your finances in order so that you can pay off your tax debt in a way that works for both of you.

The answer is that it depends on your unique situation and your needs. Weigh your options and choose which of the tax debt solutions discussed before is best for you.

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