IRS Tax Settlement - Overview

Tax debt and delinquent payments can be tough so you have to prepare yourself for what you should be expecting and dealing with. Before you get scrutinized and hounded by the IRS, look to getting into an IRS tax settlement program. Explore your options and look for solutions in order to resolve this tax issue as quickly as possible. There are IRS tax settlement options for your specific case.

Before you start an IRS tax settlement live transfers program, get your documents and records ready. Make sure that you have filed your tax returns properly. If not, you can consult with a tax attorney or a professional who can look into your files and even find ways to lower your tax liability. They can prepare an amended tax return and give you advice on dealing with tax debt. Be ready with your financial records so that they can perform an assessment and get a clear look at your situation. They can help you present your case properly to the IRS. This should give you an easier time in handling your settlement.

If you are not able to process your return in full, along with the incurred interest and penalties, you still have other settlement options. There are installment programs which allow you to pay for taxes owed on a monthly basis. Negotiating with the IRS to come up with the amount for your monthly obligation involves disclosing your finances and status. If you have a good reason for not being able to pay your tax liability, you can try to get the penalty removed. These are your options for those who have a hard time paying in full, but can handle a lower amount.

Due to grave financial difficulties, you might find yourself unable to pay your back tax at all. If you are under this type of situation, you can request placement on Currently Not Collectible or CNC status. It is a temporary option, which holds off collections until you are able to deal with your taxes again. There are other settlement methods, which you can check on the IRS website.

When you have trouble with back tax, face the situation and start looking for solutions.

Whatever situation you are in right now, there is an applicable program. The last thing you want is to drag this on for a long time, which only prolongs your troubles and stress. Protect your hard earned income and assets. Aim at resolving any tax issues and concerns right away.

Common IRS Tax Settlement Programs

Full Payment
The fastest way to resolve owed back taxes is by paying them in full. This includes paying the interest and penalties that have been assessed by the IRS back. These penalties and interest can quickly add thousands of dollars to your tax liability as they are constantly accruing. If you intend to fully repay the IRS then you should try to do so as soon as possible to avoid additional expenses.

Installment Agreement
By negotiating an Installment Agreement (IA) with the IRS, you can repay all, or part, of your total back tax liability through manageable monthly payments. The specific monthly payment is based upon how much you owe and how much you can afford to pay. However, negotiating your payment will require a full disclosure of you and your spouse's financial information. Additionally, as with all IRS tax relief programs, you can only enter into an agreement if you have filed all your necessary federal income tax returns.

Streamlined Installment Agreement
This is a special type of Installment Agreement. Again, the Streamlined Installment Agreement (SIA) is just a monthly payment paid to the IRS to address your back tax liability. The difference is how it is calculated. An IA is based upon a comparison of income to expenses. An SIA is based upon how much you owe. So long as you owe less than $25,000 and the tax liability will not expire in less than five years, you qualify for this payment plan.

Placement on CNC Status
If you cannot afford to pay on your IRS back taxes at all, then you might qualify for placement on the IRS' Currently Not Collectible (CNC) status. However, you will need to prove to the IRS that your monthly necessary living expenses exceed your monthly income.

Offer in Compromise
The final settlement program offered by the IRS is an Offer in Compromise (OIC). With an OIC you submit an offer to the IRS detailing what you can afford to pay in a lump sump. If the IRS accepts then by submitting payment you will resolve your tax debts. However, submitting an OIC requires disclosure of extensive financial information in order to prove that you could not repay your taxes fully over the next 4 or 5 years even if the IRS forced the sale of all assets that you currently own.

Innocent Spouse
This is a very limited form of tax debt resolution. It is only applicable when one's spouse files a joint tax return which accrues a tax liability without any knowledge on the part of the other spouse of what caused the underlying IRS tax liability. Although it is very limited, it is one in the best forms of tax debt resolution because it completely eliminates the debt, interest, and penalties from the innocent spouse's IRS account. However, the "non-innocent" spouse still needs to seek a different form of resolution.

IRS Tax Settlement Help: Five Negotiation Mistakes to Avoid

Let's face the truth: The Internal Revenue Service is a scary federal agency that could easily ruin the life of any U.S. citizen. Nobody wants to be contacted by the IRS or receive those terrifying IRS letters in the mail, but when it does happen, the first thing that people often think of is to look for quick ways to escape their tax issues. Mistakes happen when people rush to eliminate their tax problems, and this can cause much more harm to them in the long run.

Only a few taxpayers have the guts to deal with the IRS on their own, especially when the IRS is after them. Also, many are not aware of the potential mistakes that can happen during IRS debt-settlement negotiations. This post will address the latter problem, so let's take a look at the five major mistakes taxpayers make when it comes to negotiating their IRS debts.

1.      Failing to be up to date on tax payments: If you're not current on the payment of your estimated taxes or if not enough taxes have been withheld, then carrying out negotiations with the IRS can be an unnerving exercise. This is because when you approach the IRS for debt-settlement negotiations, the first thing they expect from you is that you are in compliance with current tax rules. This means that your tax filings must be up to date and that you are making estimated tax payments on a regular basis.

2.      Thinking the IRS will work towards your best interest: The employees of the IRS represent the government. They don't have your best interest in mind. Regardless of how nice they might seem, their only aim is to collect the maximum amount of money from you within the shortest amount of time. You will end up being disappointed if you think that the IRS official is there to help you lower your tax debts.

3.      Not considering other settlement options: Many people quickly gravitate towards the IRS Offer in Compromise program to resolve their tax debts. Although this program may work for some, it certainly does not work for everyone. There are other solutions, however, like the Partial Payment Installment Agreement (PPIA) that can work best to minimize back taxes in many cases. Chapter 7 bankruptcies are another potential debt-settlement tool for you to consider.

4.      Not completing the IRS forms accurately: Most people fail to address their tax issues until they have already become very serious. They fail to give careful consideration when filling out the details on the IRS forms 433-A, 433-B and 433-F. They simply complete them just like they were filling out a 1040 tax form. The Internal Revenue Service will scrutinize all of the facts, disclosures, and expenses along with your ability to pay before they entertain anything less than full payment. So whatever you decide to mention on the IRS forms, it must be backed with a solid story and accurate information. You can also get help from a tax debt expert, who will review your documents and make suggestions. Remember, any mistakes made here can be used by the IRS to force you to pay more than what you can afford.

5.      Not fighting back against a bad IRS decision: The IRS employees won't be always correct while making decisions. If you disagree with any particular IRS action, you have the right to request for the IRS appeals office to look at the case. But filing an IRS appeal is a very time-sensitive issue. In order to avoid potential adverse consequences, it is recommended that you have a professional tax attorney carry out the entire appeal process, from the filing process through the debt negotiations, for you.

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