Can You Settle Your Tax Debt before the Holidays?

Can You Settle Your Tax Debt before the Holidays?

• Nov 01, 2022

The holidays are approaching quickly, and for many people, that brings extra expenses like gifts and travel costs. However, if you’re struggling under the weight of a heavy tax debt, being able to afford those things might seem like they’d require a Christmas miracle. The good news is, the IRS offers many tax settlement options and payment plans for taxpayers. But is it possible to settle your tax debt before the holidays are here? Keep reading to find out more.

What Tax Settlement Plans Are Available?

Whether or not your tax debt will be completely settled before Christmas will depend somewhat on the type of settlement plan you receive. If you hope to have your tax debt completely settled and the slate wiped clean, you’d need to qualify for an Offer in Compromise (OIC). These settlement plans are quite difficult to qualify for, but it’s always worth exploring this option to see if it might be available to you. With this type of plan, you would make an offer to the IRS in the amount that you believe you can reasonably pay on your debt. If the IRS believes that this amount is the most they could hope to collect on the debt before the statute of limitations expires, they’ll accept the offer, you’ll pay off your debt, and all will be settled.

Your other options are short-term and long-term payment plans, which divvy up your tax debt into more manageable monthly installments. As the names imply, short-term payment plans are spread out over a shorter period of time (namely, 180 days or less), while long-term payment plans are spread out over a period of up to 72 months. Obviously, these payment plans wouldn’t settle your tax debt by the holidays. However, it can relieve the burden of unmanaged tax debt, so you can breathe a little easier and enjoy the holidays a little more, knowing the debt is now under control.

How Long Does It Take to Receive a Settlement Plan?

Obviously, paying off the debt isn’t the only thing you’ll have to do to take care of your unpaid taxes—you’ll actually need to qualify for that settlement plan first. The amount of time required to do so can vary widely, but depends heavily on how accurate your first application is. Understanding the qualifications for the payment plan you want, ensuring you meet them, and providing all of the necessary forms and financial documentation is a complicated matter, and a single mistake can often cause your application to be rejected. This can leave you still scrambling to get your tax debt under control even when you should be able to enjoy the holidays with your family.

Generally speaking, it takes between one and two months for the IRS to review and process an application for an installment agreement or OIC. Then, they may request additional information before they can approve your request. If you hope to have your tax debt under control before the holidays, it’s incredibly important that you include all the necessary information in your first packet submission so that the IRS does not need to request additional documentation from you.

How to Speed Up the Process

Thanksgiving is a few weeks away, and there is only a month and a half left until Christmas arrives. That’s a fairly short time frame in which to receive an IRS payment plan, but it’s not impossible—if you know how to accelerate the process. There are no big secrets to speeding up your installment agreement application. It really comes down to two simple things:

1. Get the documentation right the first time – No matter how much of a hurry you’re in, you’re going to save time by meticulously going over your documents, the forms, the qualifications for your desired payment plan, and so on, ensuring that you’ve dotted every I and crossed every T. Resubmitting an application will always take longer than getting everything right the first time around.
2. Work with an experienced tax professional – We know that this process is confusing and stressful, especially during the holiday season, when you have so many other things to worry about. Working with the IRS Advocates provides you with the expert guidance you need to ensure you don’t miss any important details. We also have years of experience in this area and can leverage that to your advantage, hastening the process.

If you’re hoping to get your tax debt under control before the holiday season, contact the IRS Advocates today to get started on a settlement plan application right away.