Posted on June 5, 2009 at 5:52 am I have IRS debt and am in a monthly payment plan for a couple of years now. I have had my tax refunds from the last couple of years applied to that debt. But it doesn't seem to chip away at my debt -- I just wish for it to disappear. If anybody can tell me how to magically do that, I'd pay you what I pay IRS.

Posted on June 5, 2009 at 5:58 am I understand how frustrating it could be to be paying what you could each month and still not lower the original amount that you owe. It maybe that IRS adds interest and penalties to your debt. About 24-25% in total each month. Plus your payments and tax returns are applied to interest and penalties first.

Posted on June 5, 2009 at 6:03 am I see and thank you dear. What can I do then to solve this cycle of just scratching the surface? Should I get a loan to pay off all of the debts, I heard of that, but I thought that that's just going to add to my debts, so I did not bother.

Posted on June 5, 2009 at 6:12 am Were you referring to debt consolidation loans? You are probably correct that it is not the best solution for you as it may just make your situation worse. You may try the following instead:Try to get a bank loan to pay off your IRS debt, its interest is far lower than the IRS, and you might actually see a decrease in what you owe. If you are able to do this you may get back your tax refunds each year. If you can't get a loan try asking the assistance of a tax attorney or a certified public accountant to talk with the IRS regarding your payments. They can negotiate for your payments-- to be applied to the actual debt --instead of them going to the interest and penalties. They can tell the IRS that if the amount of your debt is lowered, then the interest and penalties will go down too.

Posted on June 5, 2009 at 6:16 am If those tax professionals fail to negotiate on your behalf,  you may also just do nothing and wait for the Statute of Limitations on your debt to save you. The Statute of Limitations is the limited time of 10 years for the IRS to collect on your debt. It means that after 10 years your IRS debt would be released, and that could very well answer your question: Can debt disappear.

Posted on June 5, 2009 at 8:12 am I would not recommend just waiting around for the Staute of Limitations to expire as citizenoftheplanet suggested, unless of course it is almost up. The IRS can exercise some very powerful collection tactics that include wage and bank garnishments as well as property seizures. If you do not want to put your assets at risk I would suggest doing something to resolve the debt. Doubleickey24 makes a helpful suggestion- seek the help of a tax professional. CPAs, tax attorneys and Enrolled Agents are all qualified to represent taxpayers in front of the IRS.  In fact, Enrolled Agents can represent people from all 50 states in front of the IRS. It sounds like you are set up on an Installment Agreement (monthly payment plan) at this time with the IRS and it isn't working out. I would suggest looking into submitting an Offer in Compromise to the IRS, which would allow you to potentially settle your tax debt for a reduction of what is owed. A qualified tax professional would be well versed in regards to tax settlement issues, as the process may be difficult to execute on your own.