What To Do If You Cannot Pay the Taxes

by | Aug 10, 2020 | Tax Debt, Tax Resolution, Tax Tips

So what happens when you cannot pay your federal and state taxes? According to the IRS, there are more than 13 million taxpayers in the IRS collections division inventory at the end of 2019, compared to 2018 where there were over 14 million taxpayers.

Like the one million who resolved their taxes, you can do it too. This is obviously what we do. We help taxpayers in Cobb, DeKalb, Fulton, and Gwinnett get out of their tax debt and resolve their tax issues. How taxpayers get out of tax debt can be summarized in four steps:


Step Number One: “Tax Compliance”

If you cannot pay the federal and state taxes and you need to get out of tax debt, then the first thing you need to do is to get into “tax compliance”. “Tax compliance” means that you have filed all of your tax returns that are due as of this moment and that you have made your current payments either through estimated tax payments (self-employed) or sufficient withholding (W-2 employee). For businesses, “tax compliance” also includes filing and making all quarterly payroll tax deposits.

Step Number Two: File Returns to Avoid Penalties

If you have not filed your tax returns for several years, the good news is that “tax compliance” means only the last six years of taxes. Currently, this means from years 2014 through 2019. And if you cannot pay, get your returns filed anyway! The least you can do is not accrue any late-filing penalties, which is a steep 5% of the tax per month, capped at 25%. You should not have to pay the government penalties that can be easily avoided.

Step Number Three: Pay the Current Taxes

If you have a limited amount of money, pay the current taxes first. Most taxpayers think that they need to pay the back taxes first to show good faith to the government but this is a big mistake! Pay the current taxes first. If you do not pay the current taxes first, then you are not in “tax compliance”. And if you are not in “tax compliance”, then you are not eligible for Step Number Four.

Step Number Four: Resolve the Back Tax Debt

So how do we resolve the taxes? What are those options? We can make you uncollectable, which is simply showing that you do not have the ability to make payments right now. We can get you into a payment plan, an installment agreement where you pay the tax over time. There are also many different variations of installment agreements depending on your personal situation. Lastly, if you are eligible, we can do an offer in compromise to negotiate down the tax debt. This is a really intense fact-driven analysis and we need to sit down with you to see what you will be eligible for.

This pretty much sums up the four steps that taxpayers follow to get out of tax debt. If either you or someone you know has a federal or state tax issue, either returns that have not been filed or back tax debt, then contact us. Let’s get together and get this resolved. We can help you move on past the taxes and free up all the stress of taxes that has been over your life.

Contact a Tax Attorney Atlanta — free one-hour consultation


If you are facing a tax dispute or audit, you probably have questions, and Gao Tax Law has the answers. Our mission is to help you obtain a fair resolution to your tax debt and to provide you with excellence, integrity, and personal attention every step of the way. This begins with a confidential free consultation for one hour, at no cost to you, where we will thoroughly examine the facts of your case and guide you through your options.

Located in the Cumberland-Vinings area, we serve individuals, families, and business owners throughout Metro Atlanta. Our goal is to make the tax resolution process as easy as possible for our clients, and as a partner with Regus and its network of workspaces, we can meet at a convenient location near you.

Your future is bright with Gao Tax Law Firm LLC. If you’re ready to begin your road to tax relief, contact us today, and we can create better solutions for you in no time.