What to Do If You Owe the IRS Back Taxes

It is estimated that there are millions of people in the United States who currently owe the IRS back taxes. The majority of these people are filing their taxes with form 1099, which means that 9 times out of 10 they are self-employed. It is especially easy for these people to fall behind, because the majority of them do not have any taxes taken out of their check, or they simply neglect to send in a quarterly payment to the IRS.

If you are one of these people and you happen to owe the IRS less than $10,000, in most cases the IRS will put you on a payment plan. If you are able to afford the monthly payment this may be a good option for you to pursue. However, if you can't afford the payment, or you owe the IRS more than $10,000, you may have to look at alternative methods of resolving this situation. If you are thinking about negotiating a settlement, keep in mind that the IRS will not even talk to you about the matter until you have filed all of your taxes.

Let's say for example that you have not filed for the years 2005 or 2006. Before the IRS will talk to you about a payment plan they will require you to first file for the years in question. Most people would choose a reputable tax representation firm to prepare the taxes on their behalf. However if your returns are easy to do, or you have done them before in the past, you may be able to handle this task yourself.

If you owe, and you're not able to pay your back taxes in full or get yourself set up on a repayment plan, you may qualify for "Currently Not Collectible Status." This is a condition in which your overall situation and your current financial situation prove that you just can't afford to pay on the debt right now. Many times the IRS will put a temporary hold on their collections efforts until you are in a better position to begin to repay your debt.

Many times when people are indebted to the IRS, a huge portion of their debt is actually comprised of interest and penalties. If this is your situation, then you may qualify to have your penalties abated. Your first step would be to contact the IRS to speak with a representative to determine how much of your actual debt is actually penalties and interest.

If your are planning to deal with the IRS yourself, be forewarned because there is a lot of red tape involved when it comes to dealing with the IRS. After all they are the Nations largest collection agency. Some people actually prefer to use the services of an IRS Resolution Firm to settle their tax issues. These firms specialize in dealing direct with the IRS on behalf of their clients. You should easily be able to come up with a list of available firms in your area by looking through your telephone book.