How to Pay Your Tax Debt

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Pay Out Tax Debt
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Most taxpayers receive a refund. But some have a
balance due to the ATO or other taxing authority
and the amount can vary from a manageable amount
to something a bit scary. That raises the
question, "What can I do about my tax debt?
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The ATO and other taxing authorities are often
very aggressive collectors and they generally
have legal powers not available to your other
creditors. When an individual or a company owes
tax debt, the government, wants payment.
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Different Ways to Pay . . . . .
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Know the facts and investigate your options.
Let's say you wish to pay all your taxes but
handing over the full amount in one payment is
either impossible or would make things really
tight for you. There are ways to pay. It will
cost you as there are almost always penalties for
late payment but the costs can usually be managed.
Pay Out Tax Debt
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Here are some options for repaying or otherwise
dealing with your tax debt
An offer in compromise  Installment
Agreements  Hardship Deferrals  Bankruptcy
Discharges  Legal Limitations
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An offer in compromise is where you tell the ATO
you can't pay the bill in full but you can pay X
dollars. They'll investigate and may negotiate.
If you can agree, you'll pay the new liability.
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You could pay off your debt in installments just
like you make payments on any other type of
contract. There'll be a charge for this option
but it can clear your debt and not all in one
payment.
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If you have hit the rocks financially you can
raise the issue of hardship. Creditors know they
can't get blood out of a stone and detailed
documentation of your circumstances is required,
but this is an option.
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Bankruptcy is not a good option for some
taxpayers, but in some circumstances, it is the
best or only way out. If you file for bankruptcy
and it is (discharged) completed, there are
several downsides but your debt to the ATO will
not be one of them.
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In general, once a tax assessment is made, the
ATO has a legal limitation of 10 years in which
to collect their money. Sometimes cases get
mislaid or forgotten. If time has gone by and
your tax debt is not paid, under most conditions,
once 10 years has elapsed, so does your
obligation to pay. 
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In some cases the statute may differ, depending
on what method for handling the debt you are
evaluating.
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