By STEVE RHODE
Gannett News Service
Question: We have an income tax debt from five years ago that continues to grow despite making monthly payments to the IRS. Is there anything we could do to at least get out of the interest and penalties - the total debt is now $14,000.00 and we are paying $320.00 a month, but at this rate, we will never be able to pay it off. We have considered a home equity loan to pay it off.
Answer: A home equity loan is a smart idea to consider as long as the interest rate is low and the total amount of debt secured by the house does not exceed its market value. Using a home equity loan, you would be able to eliminate your obligation to the IRS and get a tax break, too. If you don't want to or can't get a home equity loan, talk to your representative at the IRS and attempt to negotiate a repayment plan that makes sense. It is worth a shot.
While dealing with the IRS seems intimidating, it can often be less threatening if you have a third party intercede on your behalf. You might want to contact the National Association of Enrolled Agents at www.NAEA.org. A local Enrolled Agent can assist you in dealing with the IRS.
Enrolled Agents are licensed by the federal government and are authorized to appear in place of the taxpayer at the Internal Revenue Service. Only EAs, attorneys and CPAs may represent taxpayers before the IRS. The Enrolled Agent profession dates back to 1884 when, after questionable claims had been presented for Civil War losses, Congress acted to regulate persons who represented citizens in their dealings with the Treasury Department.
Q: I have been searching for a loan - for consolidation. I keep getting replies for negotiating and that is not what I need. Where can I go for an unsecured loan without collateral? I don't have very good credit or anyone that can co-sign for me.
A: If you keep this up, you are a prime candidate to get suckered or swindled. If you have no collateral and bad credit, reputable lenders will not give you a loan because you are a high credit risk. While there are people that will promise you a loan and charge you an upfront fee, it is my experience those never come through. You're better off working out a repayment plan with the party you owe.
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