The short answer is yes. Tax settlement companies have the experience and knowledge of tax laws to negotiate your outstanding tax debt with the IRS or State.
Trying to do it on your own could result in lost money or even worse, criminal charges if done incorrectly.
What is Tax Settlement?
Tax settlement is a process where tax debts are negotiated with the Internal Revenue Service (IRS) to reduce or eliminate the amount owed.
It involves negotiating with them by, setting up payment plans, removing tax liens and other arrangements. Taxpayers must meet certain criteria to be eligible for a settlement, such as not having filed taxes in several years or owing more than they can pay. The IRS may also require an Offer in Compromise (OIC), which is a lump sum payment that would settle the debt for less than the total debt. Settlements are beneficial for those who cannot afford to pay off their entire debt at once, as it allows them to manage their payments over time and avoid further penalties from the IRS.
Benefits Of An IRS Settlement
An IRS Settlement can be incredibly beneficial and often necessary for those struggling with tax debt. An properly negotiated settlement allows some taxpayers to reduce or completely eliminate your tax debt. This type of agreement can be incredibly helpful as it lowers the overall amount owed, giving taxpayers more options and flexibility to pay the debt.
Additionally, Settling the debt can help you avoid the lengthy and expensive process of filing for bankruptcy. It can also help prevent tax levies, liens, and wage garnishments, all of which can damage your credit score and have serious financial implications. Tax settlement help could potentially save you thousands of dollars in taxes while providing much-needed relief from your overall financial burden.
How Does Tax Settlement Work?
Tax settlement is a process of negotiating with the IRS to help pay your tax debt. It involves working out an agreement or payment plan that is mutually beneficial to both parties, and can be especially helpful to those who owe taxes but are unable to pay the full tax bill. The primary goal of a tax settlement is to reduce the amount owed by reducing interest and penalties, or even eliminating some of the debt altogether. So how does it work? There are two main steps in the tax settlement process.
Determine how much you actually owe to the IRS.
The first step is to figure out how much federal income tax is actually owed. Most of our clients come in because they received a notice from the IRS saying they owe them money. If there are past due returns and they haven’t been filed, the IRS calculates the federal tax debt amount based on what they think you owe. In most cases the calculation is often wrong. After preparing and filing your tax returns, we often find that the amount of tax owed is significantly less than what they are asking for.
Determine the best option for tax payment.
Once the overall tax amount has been established, we need to determine the best payment program based on your current financial situation. If it is a smaller amount that can be repaid easily then a lump sum or payment plan can be worked out with the IRS.
If the amount is too large and you are unable to pay off the tax due to financial hardship then we would start to negotiate a tax settlement. Our tax relief professional will work with the IRS on your behalf to negotiate an amount that you can afford. Once the settlement offer is accepted, a lump sum payment will need to be made to remove the debt and your tax balance will be zero.
The IRS has several options available, including an Offer in Compromise, Partial Payment Installment Agreement, and Currently Non Collectible Status. Each option has its own set of requirements, so it’s important to research each one thoroughly before making a decision.
While resolving tax issues can be complicated and time consuming, a tax settlement firm can help taxpayers get back on track and put their finances in order.
Who Is Eligible For A Tax Settlement?
Generally, anyone who owes back taxes or has an outstanding tax balance is eligible. In addition, people who have received a notice of delinquency or bill for unpaid taxes may be able to negotiate an agreement. In some cases, taxpayers may also qualify if they are unable to pay their taxes in full and have fallen behind on their payments. Here are the qualifications for an OIC.
- Filed all required tax returns and made all required payments
- Are not in an open bankruptcy proceeding
- Have a valid extension for a current year return (if applying for the current year)
- Are an employer and made tax deposits for the current and past 2 quarters before you apply
People who are self-employed and those who own businesses can also benefit from a tax settlement if they owe back taxes. To be eligible, taxpayers must demonstrate that they cannot afford to pay their full tax liability and must submit evidence of financial hardship such as unemployment or medical bills. If going it alone, taxpayers should contact the IRS directly to determine if they qualify.
What IRS Tax Settlement Services Are Available?
When it comes to settlement options, individuals have a few different choices. One of the most common methods is to negotiate with the Internal Revenue Service (IRS) for an Offer in Compromise, which is a one-time payment that reduces the amount of money owed.
IRS Negotiations can be difficult and time consuming as there is no direct line to call in to the IRS for the general public and the wait times are usually in the hours if you are lucky. The other problem with going it alone is you may not have the experience to know how much the tax authorities would be willing to accept as a settlement. This alone could be in the thousands of dollars depending on the total debt.
Another option is to enter into an installment agreement with the IRS, which allows taxpayers to pay their debt in regular, manageable monthly payments over time. Additionally, some taxpayers may be able to have their debt forgiven through a Partial Payment Installment Agreement or by filing bankruptcy.
It’s important to understand all your options before making any decisions, as each case is unique and can have different outcomes. Consulting with a tax expert can help you determine which method will work best for your situation. There are a number of tax help companies that can help with your tax problem. Another option is to avoid it all together and eventually go to jail. (We don’t recommend this option 🙂
Can I Settle With The IRS Myself?
Yes, it is possible to settle with the IRS yourself. Although it may be a daunting task, there are several ways to go about it. You can send a written offer in compromise, which is a proposal to pay less than the full amount.
Alternatively, you can set up an installment agreement with the IRS, which allows you to pay your debt off in monthly payments over time. Additionally, if you feel that you have been unfairly charged or assessed for taxes, you can file an appeal and challenge their decision.
Ultimately, settling your current tax debt yourself requires research and patience; however, if done correctly, it can result in a favorable outcome and provide peace of mind.
Why You Should Hire A Professional To Settle Your Tax Debt?
Whether you choose us or another tax settlement firm to negotiate on your behalf, it is highly recommended that you hire an experienced tax professional.
Working with a qualified and experienced tax resolution specialist will help ensure that you get the best possible result from your situation. They will be able to review all of your finances and help negotiate an agreement that works in both parties’ favor. This is important because if you try to go it on your own and it’s done incorrectly, it could lead to further issues or even criminal charges being brought against you.
Furthermore, a tax professional can help provide sound advice on other financial matters which may arise as a result of your tax debt. Ultimately, hiring a professional to settle on your behalf will save time and money by providing the necessary guidance and expertise needed to properly resolve the issue.
Benefits of working with firms that specialize in tax resolution.
- Stop IRS collections
- Reduce or eliminate your total tax liability
- Having someone that specializes in tax on your side
- Lower tax payments
- Expert in all tax relief programs
- Higher odds to qualify for tax settlement
We hope you found this article helpful and we are standing by to help you with your IRS tax relief. Give us a call today at 1-877-860-3731 and consult with a tax specialist for free to see how we can help with your federal and state tax problems.