What happens if a person who still has a lot of debts ($11,000) on various loans and credit cards, cannot pay one’s income tax?
The government will usually be willing to make arrangements. I think you can extend payments to something like three years. There are some conditions of course. Since the IRS is the only ones who can put you in jail AND since you are guilty until you prove yourself innocent where the IRS is concerned, PAY THEM BEFORE ANY OTHER DEBT. Serious! They can and will get a judgment and padlock your entire house or place of business if it is a business debt. For the IRS one can either attempt to file form 656 Offer-in-compromise
or Form 9465 Installment Agreement request. One could also contact the Taxpayer Advocate at the IRS for assistance. I hope this helps.
Its not a pretty sight. The IRS is not someone to fool around with as we found out in 2013. I would highly recommend borrowing the money from ANYONE/ANYWHERE you can, to get that paid off first.
While it is possible to make payment arrangements with the IRS, payments and penalties add up faster with them then your average debt. Also, the IRS and state tax agencies are quicker to attach garnishments and take other legal actions.
Your first priority should be to pay your taxes – even if it means paying less to other creditors.
Just a thought from a CPA specializing in tax preparation.
I have been there on that one too, I talked to some one there and they went over my bills that I had and, looked at what I owed and what I could pay, but if you dont talk to them you will find out very quickly what they can do, for instance, I had money in my account to pay my rent, and that was all I had in my account they took that, or froze my bank account so I couldn’t pay rent.. so how is that..you need to be in contact with them in a hurry..that is one bill collector you do want to call..
From my own personal experience, this is a bit far-fetched and scaring people who feel bad enough is not necessary. I had a debt over $12,000 which I’m still paying on. The IRS may not like it but they are allowing me to do it and haven’t put me in jail yet.
yeah, with our experience, they didn’t want to hear any excuses and wouldn’t work out any payment plan with us. It was pay up, or pay MORE. period. The penalties and late fees were horrible.
I did not say they would not allow payments, I wound up doing that a few years back. But I took every credit down to minimum payment until I paid off the IRS. Almost 20 years ago, there was some confusion concerning a W2 I never received but the IRS did and it was incorrect. I showed the IRS my timecards, agreed to that amount of not claimed, less then half the penalties and interest and the IRS accepted it.
All I am saying, and so are several others, don’t play with the IRS. They do not play nicely.