Paying Off Your Tax Debt

 Posted on January 12, 2023 in Taxes

You may feel overwhelmed if you're one of the millions of Americans with tax debt. The good news is there are options for paying off your tax debt. The Illinois Department of Revenue (IDOR) and the Internal Revenue Service (IRS) offer plans to help you get out of tax debt. 

As our Glenview tax professional at the Livingston Law Office explains, with a bit of planning and effort, you can get your tax debt under control.

The Process: What You Need To Do To Pay Off Your IDOR Tax Debt

If you have an outstanding tax debt with IDOR, you may be eligible to set up a payment plan. 

If you decide to set up a payment plan, you will need to correctly complete and submit a “good faith” application. When filling out this form, it is essential to determine what you can afford to pay. Take a look at your budget and see how much you can realistically afford to put toward your back taxes each month. It is also important to speak to a professional to ensure that all the details are filled out correctly to avoid the application getting rejected. Applications can also be rejected if you are determined not to have filled them out in "good faith."

You may want to request an Offer in Compromise.  You will need to speak to a professional regarding eligibility and help you review and analyze how much you are able to pay. In this instance, your tax professional will work with you and IDOR to resolve your tax debt with a single lump-sum payment allowing the taxpayer to pay less than what is owed. An Offer in Compromise is often recommended when you doubt that you will be able to repay all tax debt, even if given an extended period of time to do so. 

The Process: What You Need To Do To Pay Off Your IRS Tax Debt

Just as you can with the Illinois Department of Revenue, if you are struggling to pay your IRS tax debt, a few options are available to you. 

If you set up a payment plan, you will be able to avoid accruing penalty charges while making monthly payments to the IRS until your debt is paid off. The amount you will need to pay each month will depend on the total amount of your debt. You may be eligible for a Short-term Payment Plan, allowing you to pay your tax debt in 180 days or less. Or, you may need a Long-term Installment Agreement, allowing you to pay your tax debt in monthly payments. 

Depending on your circumstances, you may be eligible to resolve your IRS tax debt by paying less than the total amount you owe. With the assistance of our Glenview tax professional at the Livingston Law Office, you may request an Offer in Compromise. This option is only available if you can prove that you cannot fully pay off your debt or paying the full amount will create a financial hardship.

Get Professional Help

All the options listed above have their pros and cons, so it is important to talk to a tax professional at the Livingston Law Office to see which one is right for you. No matter what, the sooner you take action, the better off you will be. Speak to our Illinois tax professional today!