If you owe tax debt to the Internal Revenue Service, the worst thing you can do is ignore it. Tax debt can destroy your credit, freeze your assets and keep you up at night. But all of this can be avoided if you simply contact the IRS. By following a few tips, you'll be able to deal with your debt and sleep a lot easier.
Contact the Internal Revenue Service as soon as you know you owe the debt. If you cannot send the payment in immediately, you can file for an extension or a payment plan to address the issue. Contact should be made in writing and by telephone.
Write down all aspects of the contact. When you call, write down the IRS agent's name and customer service number. Note all things discussed in the conversation. Send a letter to the IRS as a follow-up to the call. The letter should detail what was agreed to in the call. Keep a copy of the letter for your records and attach the notes from the telephone conversation to the letter.
Reach an agreement. Make an honest assessment of your bills and income. Offer to send regular monthly payments to the IRS if you cannot make the entire payment in a lump sum. The IRS may require you to go through an income assessment. This can be done by filling out an IRS income assessment or over the telephone with an IRS agent. You will have to answer questions about your income and bills. From the assessment, the IRS will determine how much your monthly payment will be. The penalties and interest will continue to accrue while you are making payments.
Make each payment on time. Getting behind on IRS payments can void the agreement, at which time the IRS has the right to freeze your assets, levy your paycheck and seize property. It is best to keep up with the payments. If you find you cannot make a payment, call the IRS and ask for an extension.
Find additional money to send. Whether you get a second job, baby-sit the neighbor's kids at night or sell your antiques for profit, getting an additional revenue stream going to send to the IRS will help you pay the debt down more quickly.
Pay with a credit card. If you do not want to set up an installment agreement with the IRS, you can use credit cards to pay the debt. While you will be responsible for paying the credit card debt later, including interest, paying the IRS this way will stop the penalties from accruing.
Take out a loan. If you can qualify for a bank loan or a loan from a trusted friend or family member, you can use the money to pay the IRS debt and then concentrate on paying the loan back.
Candace Webb has been writing professionally since 1989. She has worked as a full-time journalist as well as contributed to metropolitan newspapers including the "Tennessean." She has also worked on staff as an associate editor at the "Nashville Parent" magazine. Webb holds a Bachelor of Arts in journalism with a minor in business from San Jose State University.