Gift Yourself Freedom: Resolve IRS Tax Debt This Holiday Season

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Ergedine Pericles, December 4, 2024

This holiday season instead of spending beyond your means, give yourself the ultimate gift: freedom from IRS tax debt. Tackling your tax obligations now isn’t just about reducing debt—it’s about reclaiming peace of mind, protecting your assets, and starting the new year on a stronger financial footing.

Gift Yourself Freedom: Resolve IRS Tax Debt This Holiday Season image 1

This holiday season, consider gifting yourself something priceless: financial freedom by resolving your IRS tax debt.

Here’s why addressing your IRS tax debt should top your holiday priorities and how taking action today can lead to a brighter, debt-free future.

The IRS Always Collects: Why Ignoring Tax Debt Isn’t an Option

When it comes to tax debt, procrastination is not your friend. Ignoring IRS tax notices or failing to resolve your tax issues can have serious consequences.

Unless one of two scenarios occurs — (1) the 10-year Collection Statute Expiration Date (CSED) passes or (2) bankruptcy discharges the debt — your IRS tax obligations do not simply go away. In fact, the longer your tax debt remains unpaid, the more penalties and interest it accrues, potentially doubling or tripling the original amount owed.

If left unresolved, IRS tax debt can escalate into severe collection actions such as:

Levies on your property or bank accounts
Wage garnishment
Tax liens on your home or other assets

In extreme cases, the IRS can escalate the debt to the Department of Justice, leading to a judgment lien. Unlike standard IRS liens, judgment liens have longer expiration dates. Once filed, certain IRS options are no longer available to resolve the tax debt.

The good news? Taking action now can stop these consequences in their tracks.

Why You Should Act Now

If you’ve been putting off addressing your IRS tax debt, this holiday season is the perfect time to take control. Acting now offers several key benefits:

1. Save on Penalties and Interest

Every day that your tax debt goes unresolved, interest and penalties continue to accumulate. These additional costs can significantly increase the total amount owed. However, by addressing the issue now, you may be eligible for penalty reductions—or even complete abatement.

2. Remove Tax Liens

If the IRS has already placed a tax lien on your property, resolving your debt can help remove it. This is especially important if you’re planning to sell your home, refinance a mortgage, or apply for a loan, as tax liens can severely damage your creditworthiness.

3. Stop IRS Levies

Levies are one of the most aggressive collection actions the IRS can take. They can seize funds directly from your bank accounts, garnish your wages, or even take possession of your property. However, once you begin actively working to resolve your debt, the IRS must halt levies, giving you room to breathe.

4. Prevent a Judgment Lien

If the 10-year statute of limitations on your tax debt is about to expire, the IRS can refile a lien and escalate the matter to the Department of Justice (DOJ). A judgment lien, once filed, is effective for 20 years. The judgment lien may be renewed for one additional period of 20 years by filing a notice of renewal. By addressing your tax debt now, you can avoid this worst-case scenario.

5. Start the New Year Debt-Free (or on the Path to It)

Taking steps to resolve your IRS tax debt now can help you start the new year with a clean slate—or at least a clear path toward financial freedom.

How to Resolve Your IRS Tax Debt

Resolving your IRS debt is a gift to yourself that offers lasting benefits, from stress relief to financial security.

The IRS offers several programs to help taxpayers resolve their debt. Choosing the right solution depends on your financial situation, the amount you owe, and your ability to pay. Here are the most common strategies:

1. Installment Agreements

An installment agreement allows you to pay off your tax debt in manageable monthly payments over time. This is a good option if you can’t afford to pay your balance in full but can commit to consistent payments. The IRS offers several types of installment agreements.

2. Offer in Compromise (OIC)

An Offer in Compromise allows you to settle your tax debt for less than the full amount owed. To qualify, you must demonstrate that paying the full debt would create financial hardship. The IRS reviews factors such as your income, expenses, assets, and future earning potential when evaluating OIC applications. While not everyone qualifies, those who do can significantly reduce their debt burden.

3. Currently Not Collectible (CNC) Status

If you’re experiencing financial hardship and cannot afford to pay your tax debt, you may qualify for Currently Not Collectible (CNC) status. This temporarily pauses collection efforts, including levies.

4. Penalty Abatement

The IRS imposes penalties for various reasons, including late filing, late payment, and underpayment of taxes. In some cases, these penalties can be reduced or eliminated with penalty abatement.

5. Innocent Spouse Relief

If your tax debt is the result of errors or fraudulent actions by a spouse or ex-spouse, you may qualify for Innocent Spouse Relief.

6. Tax Appeal

Challenge the IRS’s assessment of your taxes.

7. Bankruptcy

In some cases, bankruptcy can discharge part or all of your IRS tax debt. Consult with a tax professional to explore this option.

Why Work with a Tax Professional?

Navigating IRS tax debt resolution programs can be complex and time-consuming. By working with a qualified tax professional, like Ergedine Pericles, CPA, you’ll benefit from:

Expert analysis of your financial situation
Guidance on the best resolution strategy for your needs
Assistance with preparing and submitting IRS forms and documentation
Advocacy during negotiations with the IRS

This Holiday Season, Invest in Yourself

The holiday season often encourages us to focus on others—buying gifts, hosting gatherings, and giving back to our communities. While generosity is a wonderful thing, don’t forget to invest in yourself.

Resolving your IRS tax debt is a gift that keeps on giving. It relieves stress, protects your assets, and sets the stage for a brighter financial future.

Need Help Resolving IRS Tax Issues?

At Ergedine Pericles, CPA, we specialize in helping individuals and businesses navigate the complexities of IRS tax resolution. This holiday season, give yourself the gift of financial freedom.

Call us today to take the first step toward a debt-free future: