Know Your Options If You Owe The IRS Money

Sherrie Handrinos
P: 734-341-6859

Leading Tax Attorney Shares Debt Resolution Tips for Consumers

Detroit, MI – Owing money to the Internal Revenue Service, whether from a single year’s filing, back taxes, or failure to file, can strike fear in the heart of most Americans. The dilemma can be especially frightening, when you start receiving collection notices and don’t have the ability to pay.

“Most people who fall behind on their taxes are absolutely terrified of the Internal Revenue Service,” said Venar Ayar, the principal and founding tax attorney for Ayar Law Group in Southfield, Michigan. “Consumers feel like they aren’t qualified to talk to the IRS on their own, and they don’t know what their options are, making them easy targets for a growing number of so-called tax resolution firms claiming to be able to resolve their tax obligations for ‘pennies on the dollar’.”

According to Ayar, some of the claims on TV are partially true, as the IRS does have programs that allow people to settle their debts for pennies on the dollar, but not everyone qualifies for these programs and people need to be leery of “tax resolution” scams. Generally, there are three main options consumers should know about when working with the IRS on tax debts:

1. Settlements

Generally speaking, the IRS will only accept a settlement after you’ve convinced them that you are never going to be able to pay the debt off, even if you paid it over time via a payment plan. Once it’s established that you’ll never be able to pay your debt, a formula is applied to calculate an acceptable settlement amount.

2. Payment Plans

For people who don’t qualify for, or cannot afford to pay, the minimum settlement amount, consumers can get on a payment plan with the IRS. There are generally two options under a payment plan; one is a negotiated payment based on your budget, and the other is a Streamlined Installment Agreement allowing people who owe less than $50,000 an opportunity to pay off their debt in six years or less if they agree to automatic monthly withdrawals from their bank account. In order to qualify, all returns must be filed, up to the current year, before negotiating the payment plan.

3. Non-Collectible Status

For people who don’t qualify, or can’t afford a settlement, and are not in a position to pay any amount to the IRS on a monthly basis, there is a category called non-collectible status. In order to be placed in non-collectable status, a budget analysis is calculated and if your monthly expenses amount to more than what you make, you qualify for this status. In non-collectable status, the IRS agrees that because you cannot afford to pay them right now, they won’t take any action against you such as garnishing your wages or levying your bank account. You will, however, continue to owe the IRS the money, they just have agreed not to come after you for it.

It is always best to seek professional advice when dealing with the IRS, if possible, to explore additional tax relief options, review your individual circumstances, and find the best solutions.

Venar Ayar, Esq.

Venar Ayar, Esq.

Attorney-at-Law, Master of Laws in Taxation
Principal and founder, Ayar Law

Venar is an award-winning tax attorney ranked as a Top Lawyer in the field of Tax Law. Mr. Ayar has a Master of Laws in Taxation – the highest degree available in tax, held by only a small number of the country’s attorneys.