Frequently Asked Questions about Reducing Tax Debt

Here are the answers to the most commonly asked questions about how to reduce tax debt. Find out what to do if you cannot pay your tax obligations and what your repayment options are.

What do I do if I cannot afford to pay my tax obligations?

You will have less to worry about later with your reduce my tax debt efforts if you pay everything you can on your tax obligation now. If you pay as much of your debt as you can and file on time, you can substantially reduce your tax penalties. Filing on time and making diligent payments will help you delay or avoid messy collections processes later on.

What can the IRS do if I don't pay my tax debt?

Reducing tax debt as soon as possible is in your best interest because the IRS is extremely powerful with regard to what it can do to collect tax liabilities. Most likely, your wages will be garnished until your tax debt is repaid in full. Additionally, the IRS can assess liens on your assets, such as your home or vehicle, in order to pay your obligations. Your best bet is to head the IRS off at the pass and arrange a mutually agreeable repayment plan before things get to this point.

Should I develop my own reduce my tax debt plan?

Self-help efforts are certainly the cheapest way to tackle tax liabilities, but they're not always the most effective. If your tax debt is small (under $10,000), you might be able to handle the repayment arrangements on your own. However, for tax debts over $10,000, you would be better off consulting with a certified public accountant or other tax professional. These consultants can help you develop a plan to reduce tax debt and assist you in understanding the laws regarding tax debts.

Do I have to pay the full amount of my tax debt?

No two taxpayers are the same, so it's impossible to say whether you will have to repay your entire tax burden in full. Remember, though, the IRS would rather take something than nothing. For this reason, you may be able to arrange partial repayment either through an installment program or a lump-sum arrangement. With an installment plan, you pay monthly on a reduced balance of your original tax debt. A lump-sum payment, on the other hand, requires you to pay a partial amount of your original tax debt all at once to discharge it for good.