Many factors influence how long it takes to completely eliminate your tax debt. The length of your repayment period or settlement plan will depend on the following circumstances:
- How much tax debt you have and your financial conditions
- Which tax resolution options you use
- The collections statute of limitations
- IRS processing time, appeals, and other delays
Your Tax Debt and Budget
If you can pay off your tax debt faster, it’s usually wise to do so. That’s because the IRS charges late payment penalties and interest until your balance is paid off.
However, you may have a large balance due and a small amount of wiggle room in your budget. In that case, you may need an installment agreement that gives you more time to pay off your debt. This could require you to submit a Collection Information Statement to show the IRS how much you can afford.
Tax Resolution Options
Offers in Compromise can take six months or more for the IRS to process. You may need to submit delinquent tax returns first and spend some time completing your offer with your tax attorney. If your offer is accepted, your tax debt can be settled according to the offer terms, which provide a maximum repayment period of 24 months.
Installment agreements can be negotiated more quickly, but may have repayment periods of up to six years. In the meantime, your tax attorney may also pursue other tax relief strategies that apply to your case, such as penalty abatement or innocent spouse relief.
Collections Statute of Limitations
The IRS generally has ten years to collect taxes, starting the day the tax is assessed. This period can be extended while the IRS considers your requests or if you are placed in currently not collectible status.
The IRS may become more aggressive if your collection statute expiration date (CSED) is approaching, but they can’t extend this period without your consent. Once the expiration date comes, your tax debt is wiped out. But keep in mind that if you owe tax debt for multiple tax years, you may have different CSEDs for each tax year.
Processing, Appeals, and Delays
Some tax resolution cases don’t follow a predictable timeline. The IRS can take extra time to process your requests or verify your information. They can also reject your application, which could require you to go to the IRS Office of Appeals.
The length of each tax resolution case will vary, but a tax attorney can explain how the popular tax relief programs work and what the typical timelines are.
The Gartzman Law Firm can find the best tax resolution option for your situation. Use our contact form to request a consultation with an Atlanta tax resolution attorney.