Can't Afford to Pay Old Taxes? Understand Your Options First

Unemployment rates are at record highs. Many taxpayers simply cannot afford to pay their current tax debt obligations. However, there is a variety of options available for taxpayers that simply cannot afford to pay current or old taxes. Understand that each option is not equal, and you should reach out to your family and friends as a last resort.

Currently Uncollectible

Currently Uncollectible or Hardship status is granted to people who cannot afford to pay their IRS tax debt without sacrificing Basic Needs.

The IRS will compare your monthly gross income versus what they consider your "allowable expenses" to determine if you qualify for this program. If you qualify, collection efforts may be extended.

Basic Needs: These include food, housing, clothing, transportation, medical expenses, and insurance. Luxury expenses do not count, not even private school tuition for your children.

Allowable expenses Applying to One Person:

Food: $227
Housekeeping Supplies: $28
Apparel & services: $85
Personal care products & services: $30
Miscellaneous: $87

Partial Payment Agreement

With a Partial Payment Installment Agreements you can pay less than the full amount of the tax debt. To apply you must:

- Fill out Form 9465, Installment Agreement Request.

- Fill out Form 433-A, "Collection Information Statement"

- Mail this information to the IRS, along with a letter request a Partial Payment Installment Agreement.

Partial Payment Installment Agreements drag on the amount of time it takes to pay the old irs taxes, sometimes for up to 10 years. Since Penalties and Interest will continue to accrue on the account, this is probably not the best option for resolving the Tax Debt.

Credit Card

Everyone accepts credit. The IRS is no different. If you have cash in your credit cards, use it to pay your old taxes. Credit Card companies have lower interest rates and easier payment plants available. Additionally, it's a very rare occurrence for a Credit Card company to issue a lien or levy.

Loan

The interest rates on loans are far lower than IRS interest rates. If you qualify for a loan with your bank, it's a good idea to use a loan to pay your debt obligations. Much like paying with a Credit Card, payment options may have more flexibility than the IRS has.

Friends & Family

Nobody wants to ask their friends or family for money. But owing the IRS is truly a desperate situation. Interest and Penalties double and triple your Tax Debt.

Borrowing money from a family member will get the IRS off your back and keep your debt obligation low by not allowing interest and penalties to accrue like it would if you decided to pay with a Credit Card or a Loan.

Signs of the Times

The IRS issued a press releases and statements assuring taxpayers that they were going to go easier on taxpayers that owe old taxes, but they have not held true to the sentiment. The IRS collection budget increases every year. If you owe, you have to find any way possible to pay or resolve the Tax issue.

Old Taxes
Information and Help with Filing and Paying Old Taxes