How to Repay Tax Debt

Those who owe substantial back taxes are already in a bad situation. Attempting to negotiate with the IRS without proper help can dig a deeper hole. Even repaying taxes can cause problems if you are not well versed in tax code.

• Determine whether you agree with an IRS demand for tax repayment. The IRS is a large organization that processes thousands of pieces of paperwork each hour. They can be wrong, so do not issue payment simply because the logo on the bill is scary.


• Seek professional advice from a tax accountant or attorney before contacting the IRS. Making partial payment or speaking with the IRS regarding a bill can be seen as agreement on your part that the money is owed.


• Research professional tax consultants prior to allowing them to negotiate with the IRS on your behalf. There are legitimate professionals who work to reduce tax burdens for their clients through legal channels. However, there are also numerous scams that take advantage of those in desperate financial situations.


• Never pay in advance for services without a contract or substantial references regarding the reputation of your consultant.


• Do not put off dealing with an IRS issue or tax bill out of fear. Failure to deal with a demand letter from the IRS in a timely manner can result in liens on your home, levies on your bank accounts and garnishment of your wages.


• Keep records of any payments or correspondence regarding taxes. As the IRS can misapply funds, it is essential that you keep records of past payments and all future tax forms.