08 / 28 / 10

Who Would You Rather Owe...The IRS...Or a Credit Card Company?

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.

So I certainly don't mean to throw "fuel on the fire" of a debt problem by making the following suggestion, but I'll throw it out there as an option and only you'll know if it is a legitimate option for you.

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 this is assuming that you tell the truth on your credit card application. Remember...lying on a credit application is a criminal offense...don't do it.

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.

Think of it this way...a credit card company has nowhere near the power of the IRS to collect their money. Not only can the IRS take your wages, but they can also take things like your real estate, Social Security, 401(k)'s, IRA's, car, boat, house, accounts receivable, cash loan value of your life insurance, or commissions...to name just a few.

The IRS can also put a lien on your personal and investment properties, making it difficult to sell your house, destroy your credit rating and make it difficult to refinance or get a home equity loan. Of course, the "big hammer" of the IRS is that they can actually send you to prison for not filing your tax return and/or tax evasion..