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Why Owing Credit Card Debt Is Better Than Owing the IRS

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Let’s discuss the most obvious way to get out of IRS Debt. Pay the bill.  Now, before you think I’m just being simplistic, this really is an option that should be discussed.  Before we get into the five other options, it’s important that we ask the simple question. Is there any way that you could just pay the bill and get on with your life?  Before you immediate say “no”, read on. Credit Card Debt is better than owing the IRS.  Don’t get me wrong – I’m not a fan of credit cards by any stretch of the imagination.  America’s credit card debt is staggering – $800 Billion in 2005, according to an analysis of Federal Reserve Board data by Demos, a national research and consumer advocacy group. Some credit cards charge interest rates of 20% or more, and it’s “revolving door” credit…so if you only pay the minimum payment due, it often takes years, even decades to pay off the debt.  Plus, I don’t know your financial situation personally, but I would venture a guess that if you have problems paying the IRS. that you may have credit card debt problems as well. Did you know that the IRS accepts Visa, MasterCard & American express? With credit cards, according to the IRS website “you can pay current and past due Form 1040 balances along with current year Form 940 balances and current quarter plus the three prior quarters Form 941 balances.” You may be thinking “isn’t paying the IRS with a credit card like robbing Peter to pay Paul?” Not exactly. First, you’re not “robbing Peter” in this scenario.  If you’ve been extended enough credit by your credit card company to pay off your IRS bill, it’s apparently because you have a good enough credit rating to justify the credit card company’s risk that you’ll pay the money back. Now I’m not suggesting that you don’t pay your credit card bill.  But if you’re unable to make your credit card payments, there are legal limits to what the credit card companies can do to get you to pay the money.  And “Paul” in this scenario (the IRS) has much more power than “Peter” (the credit card companies) does to get “his” money.

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