debt tax plan

How To Manage Tax Debt


When you pay an upfront fee to a tax relief company, it is claimed that they can eliminate or help reduce the tax debt or help apply for tax help programs. The truth is that most taxpayers do not qualify for these programs because they cannot pay their taxes and in many cases need help with business tax debt.  Although some suggest that this will help eliminate the interest and penalties imposed by the IRS if you pay the tax debt for a fraction of the owed, this is a lie that is not worth the fees.


For those who want to pay off their tax debts but are financially strapped because they can’t pay their debts, there are options. You should consult with a certified tax agent or a tax debt attorney to review your options and develop a debt tax plan.


Whichever way you pay interest or additional fees, negotiate some form of tax relief, or pay taxes on time according to a timetable approved by the ATO or the state tax commission, anything is better than ignoring or trying to avoid your tax debt.


If combined you owe at least as much in taxes, penalties, and interest as you together can apply for a long-term payment plan that allows you to pay the monthly amount for the debt. Long-term payments plans cost more than short-term agreements, but they make sense if you owe taxes, penalties and interest $50 or less and need more time to repay them. If immediate payment of the debt is not a viable option, taxpayers can establish an instalment payment plan for 72 months with the ATO to address the problem.


help with business tax debtThe ATO gives detailed information on how to pay taxes and sign up for a payment plan. If using credits to repay your tax debt is not an option for you, the ATO offers several ways to repay it over time. The ATO has an online payment settlement tool that can help if your tax debt is greater than $50,000 and you need to pay up to six years of interest. If you do not have the money to pay off the tax debt immediately, a loan can be a viable alternative that is cheaper than adding interest and penalty rates. You shave a little off the debt by changing your return, and any interest or penalties assessed by the ATO are offset by the savings you realize.


If you are having trouble finding a way to pay the ATO the money that you owe this tax season, you might want to see if you are qualified for tax relief. Remember that no matter what arrangements you make, the ATO will say something about your tax debt and the interest and fees on each dollar you owe will continue to accumulate until you pay full.


Taxpayers in financial distress who feel they cannot cope with tax debts can make a compromise offer to the ATO. The ATO has little patience for those who fail to comply with their agreement, and it can impose penalties and interest on your tax debt. If the ATO is informed that the State Department has revoked or lifted restrictions on the use of your passport, you must be a good standing taxpayer and pay your tax bill in full or in a fixed instalment agreement.


When the ATO tries to recover a tax liability, taxpayers can appeal to try to stop the tax return, lien, attachment, or statute of limitations. The best way to avoid tax interest and penalties is to pay your tax bill as soon as possible. Since interest and punitive interest can be very high on the unpaid federal income tax, it is suggested that you borrow the money you need to pay the tax bill to avoid any accrued fees.