Trouble Paying Your Taxes?

Trying To Pay Off Back Taxes

Tax relief companies advertise help for taxpayers in distress — in exchange for an upfront fee, which can be thousands of dollars. They say they’ll apply for IRS hardship programs to lower or even eliminate your federal tax debts. They even promise to stop back-tax collection. But the truth is that most taxpayers are unlikely to qualify for the programs these scammers advertise. In many cases, these companies don't settle your tax debt. Some don't even send your paperwork to the IRS to apply for programs to help you. These companies often leave people even further in debt.

If you owe back taxes and don't know how you're going to pay the debt, try to work out a payment plan directly with the IRS (for your federal taxes) or your state comptroller (for your state taxes) and:

• Read notices you get from the IRS or your state comptroller. Ask those agencies about collection alternatives.
• Ignore promises from businesses that say you "qualify" for a tax relief program. Only the IRS or your state comptroller can decide what you qualify for.
• Don't do business with anyone that tells you to pay their whole fee upfront. If they say that, walk away. Even if they don’t ask you to pay upfront, ask how the company will bill you for services and whether they offer refunds for fees if you don’t get the promised service.
• Steer clear of companies that charge you pricey monthly “maintenance fees.” Some companies will tell you they can resolve your matter quickly and that you’ll pay the fee for just a few months. But the fees add up quickly. Some companies may intentionally draw out the process for as long as possible to keep collecting fees. Many consumers have been stuck paying fees for many months and even years.
• Be skeptical of claims about other customers’ experiences. Companies may say things like “our taxpayers paid only 10% of their debt.” Every taxpayer’s situation is unique and no company can promise a particular result. Only the IRS or your state can determine what you must pay.   

Getting Help From the IRS

If you can’t pay your taxes, the IRS offers payment options — including payment plans and offers in compromise — depending on your situation.

A Low Income Taxpayer Clinic (LITC) might be able to help you. LITCs help people of modest means who have a tax dispute with the IRS. Find out if you qualify for their services and where to find an LITC.

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers know their rights and can assist if you’re having trouble paying your tax debt. Call 877-777-4778, visit the TAS website, or find a local TAS Office.

Getting Help From Your State Comptroller

The process for tax settlements with states is like the process with the IRS, but it varies from state to state. In some states, for instance, your penalties can be waived, but interest can't. In other states, interest can be waived, but penalties can't. And in a few states, legitimate tax debt can't be reduced at all. For more information, contact your state comptroller. Visit the National Association of State Auditors, Comptrollers and Treasurers (NASACT) site for their Member Directory, or check the NASACT’s state-by-state listing.

Report Problems and Scams

If you have a problem with a tax relief company, tell the FTC at ReportFraud.ftc.gov.

Report problems with a tax preparer to your state comptroller or treasurer. To find the agency in your state, visit the NASACT.