Is A Tax Debt Loan A Good Option For Settling With IRS?

Posted on 22. Aug, 2011 by in IRS

You have a nagging back tax problem with the Internal Revenue Service, you then come across an advertisement on television or the Internet regarding a tax debt loan, and you suddenly see a way out of your problem.

If it sounds too good to be true, then it is time to be wary.

The original source of your problem may derive from a failure-to-file or a failure-to-pay issue, failing to declare income, or making mistakes regarding a tax credit.

Now you see a tax debt loan as an appealing way to finally settle accounts with IRS.

Financial institutions and companies that promote the use of a tax debt loan typically want to know the answers to a number of questions so they can properly “evaluate” your situation.

They will ask for the total amount of your debt, whether it is federal, state or a combination of the two, the type of tax involved (personal, business, payroll), and whether you have filed your tax returns.

In addition, you will likely be asked to describe your primary tax problem that requires a tax debt loan. You can expect to make a selection from among the following options – assets seized, bank account levy, inability to pay unpaid taxes, innocent spouse issue, levy against customer, lien filed, audit notice, unpaid penalties and interest, and wage garnishment.

But now comes the kicker … the detail that can be an insurmountable barrier for obtaining a tax debt loan. Invariably, the lender will want sufficient collateral for a loan and that will be linked to home ownership.

Since the housing bubble burst, home values have dropped like an out-of-control elevator. Many home owners have already taken out a home equity loan. Is it realistic to even consider using your home as collateral?

So, having convinced yourself that a tax debt loan was the best way to go, what direction should you now take?

Perhaps it’s right back to IRS and see what solutions they can offer from their bag of tricks. And they do provide options that can be very attractive.

The agency may allow you to set up an Installment Agreement. Under certain circumstances, an Offer in Compromise may be available to you.

Of course, there are important details to learn but they should be fully investigated before taking the step of a tax debt loan.

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