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Your options for paying tax debt

Residents in Washington State may not have to pay state income taxes but that does not mean that people are always able to pay the full amount of federal income taxes they owe. When faced with a high tax bill from the Internal Revenue Service, consumers might wonder what options they have if they are unable to pay the amount due by the required payment deadline. 

Some consumers might think that using a credit card to pay income taxes can help them. However, as Consumer Reports notes, this may actually make matters worse for their general debt situation. This is because the interest rate charged by a bank for a credit card account might be higher than any interest charged by the IRS if a payment plan is set up with them. The Internal Revenue Service offers a few different options for people to pay outstanding tax bills and the current interest rate is 5%.

Rather than not paying a bill that is unmanageable, taxpayers can request to set up an installment plan directly with the IRS. There are different options and costs for this based on the length of time it is expected a person will need to satisfy the debt. Short-term payment plans are for any amounts that can be paid within 120 days and long-term payment plans can be setup for durations beyond that time.

There are no setup fees associated with short-term plans but there are setup fees for long-term plans. These fees vary based on whether or not an automatic debit is setup for payments. Special fees for people who qualify as low-income are also available.

In addition to payment plans with the IRS, there are other collection resolution options available to taxpayers with a debt they cannot pay in full.  At Gellner Law Group, we provide low-cost tax consultations that help you understand all of your options, including potentially reducing the amount you owe or not paying the full amount owing.

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To speak with an attorney at Gellner Law Group about estate planning, probate, trusts, wills or tax controversy, contact our law office in Kent, Washington, today. You can call 425-336-2908 or send us an email. We provide representation across the entire Seattle-Tacoma metropolitan area.

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