Tax debt becomes more difficult to resolve with time because of the increase in the total tax debt due to IRS penalties and interest. Every month the IRS charges penalties on the total amount of unpaid taxes along with interest. Even if taxpayers cannot quality for tax debt reduction, early resolution of tax debt ensures a lower tax debt payment.

Taxpayers that cannot file their tax return on time should seek extension of time to file. Those that cannot pay the full amount of their tax bill should file their tax return and pay the maximum amount that they can. They can then use a payment plan to pay the balance in installments over an extended period of time.

It is important to seek a resolution as early as possible to avoid paying more in penalties and interest. Even after qualifying for a payment plan, the IRS continues to charge penalties and interest on the tax debt that remains to be paid. That is why when paying the remaining amount of back taxes, it is best to pay as much as you can to bring down the total tax debt.

Resolution of tax debt at the earliest also helps in avoiding collection actions from the IRS. An early resolution is the best resolution in terms of the saving of taxes and avoiding collection actions.