When the IRS Suspends Collection Notices, Does This Mean that Unpaid Taxes Will Still Accrue Interest?

When the IRS Suspends Collection Notices, Does This Mean that Unpaid Taxes Will Still Accrue Interest?

As a result, the IRS is currently dealing with a massive backlog of tax returns totaling millions of dollars. As a result, collection alerts have been temporarily halted. However, people who owe cash on their debts should not ignore this advice.

According to Erin Collins, a Nationwide Taxpayer Advocate, a stopped notice does not always mean that interest is no longer being accumulated on outstanding bills.

According to her, she “was a strong advocate of shutting down and suspending the notifications” during a Senate Finance Committee meeting on Thursday.” To ensure that those people are informed, I’d want to remind them that interest is still accruing. “

Consequently, she encourages people to keep working toward their debt repayment goals, even though their monthly installments are increasingly harder to avoid. At this point, it’s impossible to get in touch with IRS officials.

They are, nevertheless, ready to work with you, as Collins indicated. Continue reading to learn about your alternatives if you’re one of the millions who still owes back taxes.

Taxes can be paid in installments through an installment arrangement.

If you don’t have enough money to pay off your debt in one lump sum, you can work out an installment agreement with your lender to spread the payment out over a certain length of time.

To be eligible, you must not have any outstanding tax returns. In addition, the total amount you owe, including all taxes, penalties, and interest, cannot exceed $50,000.

Erin Collins counseled against taking this route, saying you should consider your financial future first, but she didn’t go further detail. For example, you will breach your contract terms if you are unable to pay future tax requirements. Moreover, this might lead to a whole new set of problems.

An installment agreement, on the other hand, “maybe executed online, over the phone, or through a chatbot” if you are confident that you will not have any issues in the following several years, which is the only need.

Compromise on your debt and get your life back on track by making an Offer to Compromise

If you cannot pay off your whole debt shortly, you may be able to make a compromise offer. As a consequence of your efforts, the IRS may agree to a lesser settlement sum. “All alternative payment options” must be exhausted before the agency proceeds.

According to Collins, “You may be eligible to reduce your tax owed and settle it with finality, allowing business to put the tax behind you and go ahead.”.

Applicants must have all of their tax returns updated to qualify (unless you have a valid extension on file). You must also be timely on all of your previous tax payments to be eligible.

Obtain the ‘Currently Not Collectible status on your account.

Alternatively, the IRS may decide to put your taxes on a “currently not collectible” status, meaning that they will not make any further attempts to collect them.

Debt penalties and interest will continue to build up while you are in that state. If you’re eligible to file returns in the future, you can be sure that the IRS will be using the money to pay off any outstanding debts.

As a condition of your eligibility, you must submit all of your past-due tax returns. You’ll need to fill out several forms, depending on your scenario. In addition, a variety of documents proving financial hardship will be required by the IRS.

Also, Read Benefit Recipients Should Know About These Coronavirus Stimulus Check Tax Credits

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