If You Don’t Have Money to Pay Your Taxes, You Have Legitimate Options

by | Jun 6, 2022 | Back Taxes, IRS, Law, Tax Lawyer

If you don’t have money to pay what you owe the IRS, you have a few options to work with. But, whatever you do, don’t ignore the letters from the IRS, and don’t let your back tax problem go unattended. The IRS has a great deal of power to recover the money they think is theirs.

When you owe the IRS money, they can garnish your wages, levy your bank accounts, put a lien on your home, and seize other assets.

Here’s what you can do if you find yourself unable to pay your taxes. Note that we always recommend contacting a tax resolution professional to help avoid the harsh penalties and interest accrued on your back taxes. It’s far easier to navigate towards tax resolution if you have a professional working on your behalf. Contact us here if you’d like to schedule a no-cost confidential tax relief consultation.

First, Make Sure That You File Your Returns

Even if you have no hope of being able to pay your taxes, you must at least file your income tax returns. Whatever the penalties are for not paying your taxes, the penalties for not filing are much larger, and non-filers can be subject to a criminal investigation. The IRS will remove penalties for not filing and not paying, but you have to have a good reason. We can request to have your penalties removed or reduced. It’s also important to remember that it only gives you more time to file when you file for an extension. Your payment date remains unchanged.

Revisit your W-4 withholdings

If your employer withholds money from your salary to pay your taxes, you shouldn’t have to worry about paying anything extra from that income source. However, if you do owe more, it’s a sign that your withholding exemptions are incorrectly reported on your W-4 form. To ensure that you don’t get into tax trouble repeatedly, you should make sure your W-4 form is correct and get advice from a tax professional about the kind of withholdings necessary for exemptions.

Make a partial payment.

If you can’t afford to pay all you owe, you should pay whatever you can. While you will still be hit with interest and penalty charges, they will be smaller than if you paid nothing. These charges are proportional to what you owe the IRS.

Try to work with the IRS.

If you can’t pay, there are resolution options available to you if you qualify for them. They include a payment plan or an offer in compromise, to name a few. You need first to step up and admit to your inability to pay, though.

An offer in compromise is an agreement between the IRS and the taxpayer that allows the taxpayer to settle their debt for less than the amount owed. Sometimes, for a fraction of the amount owed. There are strict eligibility requirements, and you should consult with a tax resolution specialist first.

An installment agreement, aka payment plan, is an agreement between the IRS and the taxpayer that permits the taxpayer to pay back their debt over time, generally in 60-72 months. Depending on the amount owed and the ability to make monthly payments determines the type of installment agreement the IRS will allow, as there are several variations of these payment plans. An experienced tax resolution specialist will guide you through the maze and myriad of these different options.

If you need an expert tax resolution provider who knows how to navigate the IRS maze, reach out to our firm. We’ll schedule a no-obligation confidential consultation to explain your options to resolve your tax problem permanently.

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About Daniel T.A. Cotts

Daniel is a skilled Tax Attorney who moved to Corpus Christi in 2019 to expand his practice and return to Texas. With over 26 years of experience in the legal profession, Daniel brings a wealth of knowledge of Taxation, IRS Dispute representation & resolution, Estate Planning, Accounting, and Business & Contract Law to South Texas.


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