What Happens If You Owe More in Taxes Than You Can Pay?

May 3, 2019

Rather than expecting a refund from the IRS this year, you may have the distinct displeasure of having to send the government a check. Just as Encino Tax Advisors can help you find out how much you owe, they can also help you pay your taxes if your bill is more than you can handle right now. Here’re are a few insights to get you started.

Offer in Compromise

There’s a chance you qualify for what’s known as an offer in compromise. Essentially, you offer the IRS a type of counter offer that’s less than the full amount of what you owe, but enough that the IRS doesn’t feel you’re trying to skip out on your obligation. The proposed offer should represent the maximum amount the government would expect to collect within a reasonable time frame.

The IRS considers a number of factors when deciding whether to accept your offer:

• Asset equity
• Your ability to pay
• Expenses
• Your income

Be sure you consider those factors as well before you make your offer in compromise.

Payment Plans

Encino Tax Consultants can help you put together a viable payment plan. That way, you can pay off your bill over time. You’ll have the option of either a short-term plan, 120 days or fewer, or a long-term plan, more than 120 days. No matter which plan you choose, expect to pay penalties and interest until you’ve successfully paid your bill in full. There’s also an origination fee for the long-term plan. Just like with a credit card bill, you’re better off paying more than the minimum monthly payment whenever possible.

Above are just two options for taking care of your outstanding tax bill. Sit down with Los Angeles Tax Preparation services for more details and alternatives. Know that the IRS is more than willing to work with you to help you take care of your unpaid taxes.