It certainly doesn’t qualify as anyone’s favorite mailing.
In fact, receiving a letter from the Internal Revenue Service demanding payment for alleged tax debt can spoil the rest of the day for virtually any person in a heartbeat.
What do you do with such a communication?
Well, you can of course pay the full amount demanded. In some instances, that might obviously spell the best course of action, especially if the tab isn’t prohibitively high and a check can be written that won’t overly roil the family budget.
That is an optimal scenario, though. Tax debt often emerges as a result of formidable financial challenges facing an individual or family. In many cases, money demanded by the IRS simply can’t be paid.
At least not in one lump sum.
The IRS collection process merely starts with that demand, with the agency openly acknowledging that payment alternatives exist for some eligible taxpayers.
Most filers in Minnesota and nationally who are presented with a payment demand will in good faith try to eliminate the debt in full immediately or over an abbreviated period, given the interest and penalties the IRS tacks on to unpaid taxes. The agency process rewards that.
Put another way: It punishes payment delay by consistently escalating penalties on debt that is not promptly paid.
Some filers can avoid some of the nastiness entailed in that if they are deemed eligible to pay off debt pursuant to one of several installment programs offered by the IRS. Some persons can even qualify for a so-called “offer in compromise” that allows for payment of less than the full amount due.
The IRS collection process can understandably seem complex and intimidating to any person involved in it. In the event that a payment demand cannot be immediately satisfied, a debtor might want to contact an experienced tax attorney without delay to discuss other payment options and the eligibility requirements for participation in an IRS-authorized payment program.