Some back taxes can be fattened up over time by penalties and interests, which make them virtually impossible to pay off in the long run. If you want to be free of such debt, you may look into bankruptcy as an option—but only as a last resort.
Bankruptcy Is Not Always the Answer
Although it is one of your options, filing for bankruptcy may not always be in your best interests. There are several drawbacks that you have to consider. For instance, bankruptcy can take a serious toll on your credit rating, and it may be part of your credit reports for years. You may also need to work on a tight budget for a few years, and you may not be allowed to secure loans without the court’s approval.
Instead of filing for bankruptcy after receiving a collection notice from the IRS, speak to a tax attorney first. You may have tax relief options available to significantly reduce the amount you owe. The offer in compromise program, for example, may not be known to many. Unlike accountants and other similar professionals, tax attorneys know the ins and outs of the program. These tax law professionals can help you prepare your offer in compromise, negotiate settlements, payment plans, and more. They’ll see to it that they make the best case to help you get tax relief.