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IRS Tax Settlement

How to Settle Tax Problems

If you are behind on your federal taxes the Internal Revenue Service has been given the right by the federal government of the United States of America to use several legal methods to collect the federal tax debt. Federal taxes are a tax on your corporate or personal income and are used to fund the activities of the federal government. Thus, your tax problems have a negative impact on the government's primary source of income.

If the Internal Revenue Service has begun the tax collection efforts by either a Wage Garnishment, a Tax Levy or a Tax Lien, then it is time to discuss your financial options with an experienced tax attorney. Failure to pay your federal taxes can lead to fines, penalties or jail time.

IRS Help

A tax attorney can provide you with IRS help, assisting you through the debt collection process and helping to eliminate or reduce your tax debt. There are several IRS tax settlement options that may be available to you including the following:

  • Installment agreement
  • Offer in Compromise
  • Currently Not Collectible

Some people try to avoid paying federal taxes, but unfortunately, the IRS is not going to go away. They are part of the Department of Treasury and unlike other creditors they are given the authority to collect taxes using a variety of methods that other debt collectors may not have, including the ability to:

  • Freeze money in your bank accounts
  • Seize business and personal assets
  • Seize your equipment
  • Seize your property
  • Garnish your wages

IRS Tax Settlement Options

Installment Agreement

Under the installment agreement you may be able to pay the Internal Revenue Service in pre-determined monthly installments. An experienced Tax Attorney should be consulted before you consider any type of installment agreement. A tax lawyer can work with you and the Internal Revenue Service to negotiate the terms of the monthly installment plan. Unfortunately, this IRS tax settlement option can result in high interest and tax penalties. In addition, all back tax returns must be filed and all of the tax refunds you are due will be applied to your current tax debt. Paying the full amount of the tax debt will always be less costly than using any type of installment agreement.

Offer in Compromise Process

The Offer in Compromise is another IRS tax settlement option that can be used by certain qualifying individuals to renegotiate their federal tax liability. Through the Offer in Compromise tax settlement option the Internal Revenue Service will negotiate an IRS tax settlement that will be less than the amount of federal taxes which you currently owe. The Offer in Compromise IRS tax settlement option was created to help individuals pay all future tax obligations. The Offer in Compromise IRS tax settlement option will allow you to pay your tax debt in a lump sum payment, paying monthly installments either during a twenty-four month time frame or through the statute of limitations.

To qualify for the Offer in Compromise program you must meet certain IRS requirements. You may qualify if you can prove that the tax debt you owe is not correct, you are not able to repay the debt or due to specific hardship conditions repaying the federal tax debt will create a severe economic burden. This third reason is often applied to elderly or disabled individuals.

All IRS settlement options have very specific program requirements. The Offer in Compromise program requires the following:

  • You must pay all federal taxes on time for the next five years
  • All federal taxes must be filed on or before the tax extension deadline
  • You must pay the full tax amount outlined in the Offer in Compromise
  • All federal tax refunds are applied to your current federal tax debt.

If you are considering an Offer in Compromise IRS settlement option it is important to contact a tax attorney. The Internal Revenue service does not automatically accept all Offer in Compromise applications.

What are the Benefits of the Offer in Compromise tax settlement option?

The following are all benefits of the Offer in Compromise tax settlement options:

  • Stop the Internal Revenue Service tax debt collection efforts.
  • Potentially lower your tax liability
  • Completion of the Offer in Compromise may eliminate tax liens
  • Reduce the need to file personal bankruptcy
  • Reduce or eliminate federal tax liability

Currently Not Collectible

A third IRS tax settlement option may be available if the IRS determines your current federal Tax Debt is not collectible. To meet this criteria the Internal Revenue Service must conclude that you would face "severe economic hardship" if you have to pay your federal tax debt. Unfortunately, if your federal tax debt is determined currently not collectible, it does not disappear. You financial status will be reviewed periodically to assess your ability to pay your federal tax debt. Another downside to this IRS tax settlement option is interest and penalties will not cease or be eliminated but will continue to accrue on the outstanding tax debt amount. The benefit of this IRS tax settlement option is it may give you just enough time to regain financial stability.

Do I Need A Tax Attorney to Negotiate An IRS Tax Settlement?

If you have federal tax debt and the Internal Revenue Service has begun trying to collect the federal taxes you may be facing a variety of aggressive tax collection efforts including: bank levies, wage garnishments and asset seizures. The Internal Revenue Service can be intimidating to someone who is not an expert in federal tax law. They are aggressive and they do make mistakes. A tax attorney can answer your debt relief questions and make sure you have the correct tax information to determine the best Internal Revenue Service tax settlement option for your family.

Tax attorneys can help negotiate Offer in Compromises, installment agreements, review tax returns, tax refunds and any other tax issue which is affecting you, your family or your business.