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A Minneapolis Tax Attorney Can Share Options for Those in Severe Debt

Submitted by admin on Wed, 3/25/2015 - 1:42 am

If you are in severe tax debt, you do have options. Depending on your financial situation, you may choose to file bankruptcy, hire an IRS tax attorney in Minneapolis, or negotiating some kind of compromise with the IRS. A local tax attorney in Minneapolis may be able to help you understand all of your options. Each option may have its own unique benefits and downfalls, and it’s essential to the process for you to understand all of them so you can make the right decision. Here are a few of the options for those who are in severe debt:

Installment Plans

If there is no way around paying, most people will have to set up some kind of a payment place with the IRS. Provided you have never been in trouble with the IRS before, they are usually willing to set up an installment plan in which you can pay a small sum of the total each month until it is entirely paid off. Depending on the amount owed, this could only take a few months. If you’re severely in debt, it could take years. If you owe less than 25,000 dollars, it’s generally pretty easy to set up an installment plan. If the balance owed exceeds 25,000 the process will become more involved and it might be more difficult to set something up.

IRS Debt Forgiveness

There are other options you may consider if you are in severe debt. For instance, in some cases you may be able to get the debt forgiven altogether. PersonalMoneyStore.com explains:

“In rare cases, the IRS may forgive tax debts when the amounts owed are the result of a tax return filed a certain number of years prior to filing for bankruptcy or if the taxes owed were assessed at least 240 days prior to the bankruptcy filing. A few other exceptions exist as well, such as when it is determined that an extreme hardship exists and the debt is not the result of the taxpayer attempting to evade tax laws.”

Bankruptcy

Many believe that filing bankruptcy will solve all of their problems with the IRS, but that’s generally not the case. A bankruptcy will not completely eliminate IRS debt. In many cases however, it can result in the IRS allowing a payment plan to be set up. Often, if a payment plan is set up due to bankruptcy there are also ways in which it can prevent additional penalties and interest from being tacked on while it’s being paid off. If you choose to go the bankruptcy route, hiring a qualified Minneapolis tax attorney can help you understand the process and get the advise you need.

(Source: Options for Repaying IRS Tax Debt, January 2015)