Sometimes, we just have to do what we have to do to get by. I am sure a lot of you can relate to that. So I wanted to share some information with you that I learned while going through that time.
If you are in a situation like I was… no money and you owe taxes… the IRS does have options. The IRS can work out a payment plan for you if you request it. If you absolutely cannot make payments (like me at that time), they have something called a “currently non-collectible status” or “currently uncollectible status”. This puts your tax accounts into a hold status. It stops all collection processes until you get back on your feet. However, it does have some down sides that you should be aware of. While in that status, the statute of limitations for collection of taxes is also put on hold. But the most important thing (and they failed to tell me this at the time) is that they might place a lien against you for that tax amount. They did not tell me that would happen until after I had agreed to being put in that status over the phone. So I ended up with two federal tax liens.
That was the beginning of my tax problems for, which ultimately led to me filing for and receiving the IRS Offer In Compromise (explained in other bogs). My OIC caused those tax liens to be released, but they are still on my credit. If you can avoid the tax liens… do so. It’s extremely difficult, if not almost impossible, to tax liens removed. And they make your credit look pretty bad.
I thought I would share this information in case someone else out there is struggling too and feels like there is no hope. You might have to take some hits in some areas, but sometimes you just have to take a few steps back to go forward again.