You may have at one time thought very little of running up a tab with the IRS. Perhaps you were very young and considered yourself under the radar, and you didn’t worry about the IRS. But now you’re older and you want to move forward with your life. Perhaps you want to get a credit card or buy a home. Owing back taxes to the IRS makes this sort of thing very difficult. Here’s what can happen if you don’t pay your tax bill with the IRS.
If You Don’t Pay Your Back Taxes, You Could End Up With a Tax Lien
Unpaid back taxes will not just go away. Sometimes you can file for bankruptcy and eliminate some of your tax debt, but only if the taxes you owe are income taxes, you weren’t committing fraud when you failed to pay them, and the tax debt is at least three years old. You also have to have filed a tax return in order to declare bankruptcy and remove your tax debt. On top of that, it’s case by case so you’re never sure whether you can remove your tax debt with bankruptcy.
Taxes that go unpaid will cause the IRS to send you letters about your bill. They letters get more and more insistent that you pay, and if you ignore the letters you’ll eventually have a tax lien. This is a very nasty situation because the IRS is freezing your life…they pretty much own your house, your car, and your assets until you pay up. Once you get a tax lien from the IRS, you can’t remove it with bankruptcy.
Avoid a Tax Lien and Set Up an Installment Agreement With the IRS
Work something out with the IRS and don’t get into a tax lien situation where you can’t even sell your home or get a credit card. The IRS has several options for paying back taxes and they want to resolve it in a practical way. Why else would they have come up with IRS Form 9465… Installment Agreement Request? This is a form for setting up a payment plan with them so you can pay your tax bill even if you don’t have the cash on hand at the moment. Form 9465 is short and easy to fill out, and it saves you from the tax lien that can wreck your life for a while.
You simply enter how much you owe, and how much you can pay each month. Send it to the IRS completely filled out and you’re on your way to solving your tax debt.