A Comprehensive Guide to Settling IRS Tax Debts

Taxes are inevitable. However, if you fail to pay to the IRS due to financial circumstances beyond your control, different IRS tax debt relief options may be available to you. These options may range from IRS tax debt negotiation for Offer in Compromise (OIC) to audit representation and from penalty abatement to innocent spouse relief. Broadly speaking, however, five main IRS tax debt relief options are the following:

Overall, the strategies for successful IRS tax debt negotiation may be a lot more than the above five. But the fact of the matter is that each strategy won’t suit everybody. In fact, one of the most difficult parts when looking for tax debt negotiation help is to understand the right strategy for you. Only then, can you make the right effort to tackle the negotiation with the IRS.

Settling IRS tax debt is never an easy task since the agency would not want to miss their revenue by allowing any individual or business an easy pass. Hence, it is strongly recommended to seek tax debt negotiation help from professional tax experts.

While a number of service providers claim to provide guaranteed success, it is important that you hire someone who has the right set of skills and a proven track record of professionalism. At maximum, the chances of winning a tax settlement negotiation are at best 50-50. Hence, a professional tax negotiator will never provide any sort of guarantee. Moreover, finding the right strategy and making appropriate preparations can be a very hectic task, and includes a number of steps. Hence, you must be patient during the whole process.

One of the earliest steps includes preparing financial statements for each individual person or entity by considering current circumstances related to income, expenses, equity, and potential to earn. It is only after this step that one’s ability to pay (or otherwise) could be determined, and the right strategy may be chosen. Suppose if it established that a person (or a business) would have sufficient disposable income in the near future, then an installment plan might be the right option. On the other hand, if some income is certain, but it is less than the actual amount due, then the OIC strategy might be chosen.

A professional tax negotiator will make sure that you are eligible for the chosen program/ strategy, and that you have completed all the prerequisites in order to successfully defend your position in front of the IRS. For starters, you must have fully complied with the tax laws. Similarly, you must have filed all the returns before filing for OIC or any other option, and your payroll tax deposits in the past must be on time.

Based on your financial statements and future projections, your tax consultation company will also suggest you either make a lump sum payment or go for an installment plan. You may switch to another payment plan at any time until your proposal has been finally accepted (or rejected) by the IRS.

The decision regarding whether or not to hire a professional tax negotiator should be made after considering a range of factors, such as your knowledge and skills related to tax matters, your expertise related to handling paperwork, and the amount in question (normally, if you owe less than $5,000 to the IRS, you may not need a tax consultant).

If your application is rejected, you can appeal within thirty days using Form 13711
(Request for Appeal of Offer in Compromise).

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