What if I am unable to pay the tax that is due?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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With some taxes it more important to find a way to pay, or at least address the issue, than others. If the tax is a sales tax, excise tax, or license/permit you will need to pay sooner. Other taxes, primarily income tax, can be paid over time if you are unable to pay right away.

You will be required to provide financial information about all the property you own and establish that you are truly unable to pay the tax – even if you liquidated (turned property into cash) all of the property which you owe. If the government agrees, you can get a payment schedule – the tax is paid over a period of time. Just like a credit card, the amount due will be increased by interest on the loan,. There is no free ride with respect to tax payments.

In addition, in extreme circumstances, an offer in compromise or settlement could be reached between you and the government. Under such agreements, the taxpayer agrees to make payments – either a single lump sum or over the course of time with interest – but the taxpayer is usually required to give up the right to challenge or appeal the imposition of the tax and agrees that the government is entitled to an extended period during which it can make additional assessments.

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