One of the most common questions taxpayers have is tax settlement. Tax settlements are deals between you and the IRS to pay your taxes without a Tax Court.
Tax settlement agreements can be enforced by law or informal agreements where both parties agree on their own.
They are often negotiated when the taxpayer has a lot of assets, which could make it difficult for them to settle their tax liability in full with one lump sum payment.
If you have a tax debt, an IRS tax settlement is likely to pique your interest. Most individuals are not used to hearing news from the IRS after they have fallen behind on their payments.
However, the IRS provides tax debt settlement alternatives to help you cope with your financial difficulties.
What Is a Tax Settlement?
A tax settlement, you may presume, entails working out a problem in a courtroom –but the majority of tax debt settlements are as simple as filling out the proper IRS forms.
An IRS tax settlement is a debt settlement in which the IRS allows a taxpayer to settle his or her debt for less than what it is legally owed.
In addition, some settlement alternatives cater to small, practical payments. When the IRS makes a decision to provide a settlement, it considers unique circumstances, the taxpayer’s capacity to pay what is owed, and relevant tax rules.
Naturally, you’ll profit from tax attorneys when deciding on the proper relief option, filling out the correct paperwork, and following up with the IRS throughout this time-consuming procedure.
Benefits of an IRS Settlement
An IRS tax settlement can benefit both the taxpayer and the government. The primary advantage is that once you’ve been granted a settlement, the IRS will almost always freeze penalties and interest.
Avoiding these problems can assist you avoid the costs of asset seizure and wage garnishments. You may also be able to prevent interest penalties from adding up to a much bigger tax bill than the amount you owe.
The second major advantage is that you will almost certainly pay far less than you owe to the IRS. The fact that the IRS is often quick in terms of providing approval implies that your payout burden will be reduced substantially right away.
You’ll be able to anticipate the entire amount you’ll owe under the new terms without having to worry about any late fees or interest you’d have incurred otherwise.
Types of Settlements
When dealing with the IRS, individuals who owe taxes must consider various alternatives. Here’s a summary of what’s available:
- Offer in Compromise (OIC)- Being approved for an Offer in Compromise means that you’ll be able to settle your debt for less than what you owe.
- Currently Non-Collectible (CNC) – Approval for Currently Non Collectible status means that the IRS will suspend collection tactics because it’s determined that you can’t reasonably pay what’s owed.
- Installment Agreement (IA) – An Installment Agreement allows you to pay off your debt in smaller chunks over the course of about six years.
- Penalty Abatement – is an administrative waiver that the IRS may grant to relieve taxpayers from failure-to-file, failure-to-pay, and failure-to-deposit penalties if certain criteria are met.
You will need to meet specific qualifications for each option. The IRS will take a deep look at your financial status to determine how you can pay off what you owe realistically.
How Does Tax Settlement Work?
There are two strategies for obtaining a tax settlement. The first is to try to negotiate with the IRS for less than what you owe.
The second option is to come to an agreement for repaying your debt over time. You must fulfill the IRS’s requirements in order to pursue either choice.
However, you won’t know which solution is best for your case until you figure out which option is the most suitable.
Before making any decisions, it’s suggested that you consult with a tax attorney about IRS tax debt settlement.
Who Is Eligible for Tax Settlement?
The IRS’s settlement option is open to everyone, but not everyone will be eligible.
You’ll need to be in debt with a tax obligation that is tough to pay back, taking into account your financial position.
Alternatively, you may be able to demonstrate that you are deserving of penalty abatement.
Need help with an IRS Tax Settlement
It’s impossible to predict how much the IRS will accommodate you until all of your documents have been submitted.
We know that taxpayers benefit from engaging with reputable and experienced tax professionals throughout the process.
We’ve partnered with tax attorneys to help taxpayers get settlement approval every day. Let us help you get your IRS debt settled as quickly as possible using the resources provided by the IRS. Call today!