Back Taxes Solutions in Plain English: Understanding How You Can Resolve Your Tax Debts

One of the hardest parts of paying back taxes is simply understanding your options for settling with the government. Here are some of the most common back tax relief strategies explained in plain English.

When you find yourself in the confusing and stressful situation of owing state or IRS back taxes, it's easy to feel overwhelmed by all of the technical jargon and complicated legalese that's tossed in your direction. Those tax attorneys or accountants say they can help when you owe back taxes, but what does that really mean? Here we explain, in plain English, some of the various back taxes solutions that may be available to you. Helping you understand your options, this information can prove to be a valuable tool when the time comes to discuss paying back taxes with your lawyer!

Offers in Compromise

An offer in compromise can be a major back tax relief. That's because this agreement between a taxpayer and the tax authorities ultimately resolves your back taxes for less than you actually owe. But remember, an offer in compromise isn't a silver bullet that works for everyone. An offer in compromise is only for tax situations in which:

• There is doubt regarding your responsibility for the outstanding taxes.


• There is doubt regarding your ability to ever pay the total tax owed due to the size of your back taxes in relationship to your assets and income.


• There is evidence that collecting the full amount of owed back taxes would create hardship or be otherwise unfair.

Innocent Spouse Relief

In situations where you filed your taxes jointly with your spouse, it's possible for one partner to get saddled with the full amount of back taxes, interest, and penalties. However, the IRS accepts that sometimes it isn't fair to hold one spouse responsible for the total tax debt of both. That's why they created innocent spouse relief. This IRS back taxes settlement option offers three different variations:

• Classic innocent spouse relief: One party is absolved of all responsibility for the taxes owed.


• Separation of liability: The tax liabilities are split between the spouses according to how much each is responsible for.


• IRS equitable relief: Some back taxes relief is provided even when you do not qualify for the previous two types of innocent spouse relief.

Installment Agreements

Paying your taxes in full as soon as possible is always the most affordable solution for resolving your back taxes situation, but if that is not a possibility due to the size of your debt, there is another option. Called an installment agreement, this payment plan allows you to stretch your back taxes payments out over time to make them more manageable. Keep in mind that setting up an installment agreement with the state or IRS tax authorities won't necessarily stop interest and penalties on your back taxes owed, so make sure you ask how a payment plan will affect the total amount you'll have to pay.

Remember, not every one of the aforementioned back tax help strategies is appropriate for every tax situation, and this boiled-down explanation does not constitute legal advice. Make sure you consult with a qualified tax attorney in your area to determine the most appropriate way to settle your specific back taxes problems.

Maria Allen is an Internet marketing specialist for Prospect Genius, working to connect local businesses with customers through effective SEO.