Taxation & Estate Planning

?What if I Cannot Afford to Pay my Tax Lien?

By Darrin Mish

If you have ever been issued a tax lien, you would know how dreadfully stressful it can be. In most cases, a lien is a last resort used by the federal government to obtain money that is legally theirs. If you want to know how to get yourself out of a tax lien, follow these tips. They will also help you avoid a tax lien in future.

Firstly, you can propose a payment plan. The reason why some people are reluctant to do this is that they feel the amount of money being asked for by the IRS is unfair. But it is foolish to go into a stand-off with the IRS. There are other completely legal ways to go about reducing what you owe.

The most straightforward thing to do is offer a simple payment plan. Make a reasonable proposal and it will likely be accepted by the IRS because they want to collect their money as soon as possible. Dealing with the IRS successfully is all about showing good will and the right attitude. If you convince them that you are taking your responsibilities seriously and show the IRS that you understand the gravity of the situation, you won't be left saying, "Help! My Tax Lien Is More than I Can Afford!"

One very common reason people get slapped with a tax lien is that they misrepresented the figures in their tax returns, got audited and were found out and subsequently were given due penalty. If you got audited and caught, now is the time to stop lying and start being honest. The IRS understands that just about everybody lies on their taxes, at least once in a while, but if you want the IRS to be sympathetic to your cause, you need to be truthful and polite. Be nice to the people you talk to on the phone. Respond to IRS letters right away. Act in good faith and it will make a difference.

The most popular thing to do is make an Offer in Compromise where you offer to settle your tax debt with a lower amount that you can afford to pay. The IRS is a lot like a credit card company; they would rather get some money from you than none at all. So to get out of your tax lien, make the IRS an Offer in Compromise. If it is not acceptable by the IRS, they will most likely give you a counter offer and this can be the basis for coming to a mutually acceptable agreement with the IRS.

?What if I Cannot Afford to Pay my Tax Lien? is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on February 04, 2010 (boomark / email).