If you are behind on paying your taxes, the government can take money from your wages by “garnishing” your paycheck. This means that the government will order your employer to pay them back with funds from your paycheck, before paying you. The good news, however, is that you have helpful options for tax debt relief.
Unlike other creditors, the government does not need to go through the courts to do this. So, if you owe the government money, you can apply for an installment agreement that allows you to pay back the tax debt over time, or negotiate a lower amount.
You should be wary of companies that claim to “eliminate your tax debt,” which is basically impossible. However, you can work with the Internal Revenue Service (IRS) to set up a payment plan that works for you. The two options the IRS offer include the following:
The Installment Agreement lets you payback amounts between $25,000 and $50,000 over a five to six-year period.
The Offer in Compromise option allows you to pay the government a lump sum that is less than the amount you owe.
The Offer in Compromise is only available if all you have tried all other options.
The IRS charges interest and penalties for back taxes. Each month you are late paying your taxes, the government will charge you 0.5 percent, up to 25 percent, or 50 months. You may be able to get a lower rate by applying for a personal loan.
If you consolidate debt loans, you can pay your taxes as well as manage other debt. Some of the best debt settlement options have low-interest rates and are easier to manage than making several monthly payments to multiple creditors.