Remedy An IRS Delinquency With A Tax Settlement

If you owe back taxes, the IRS can seize your bank account, garnish wages, or put a lien on your assets.  You can remedy IRS delinquency with tax settlement and save big.

What Is A Tax Settlement?

When you settle delinquent taxes, this is referred to as a settlement.  There are a number of different programs, including the Internal Revenue Service’s program.  For those considering settling back taxes, keep in mind that the IRS has specific requirements to qualify.

If you owe $10,000 or more, applying for a Partial Payment Installment Agreement (PPIA) is one possible solution. The IRS will determine your monthly payments.  Your income, assets, and liabilities will be used to calculate the monthly payment.

Another option is an Offer In Compromise (OIC). To qualify, you must be able to provide that you suspect the amount owed is incorrect or the chances of paying back the amount is unlikely or that the amount is correct but repayment will result in financial hardship.  The approval rate for OIC is not great and you must submit a payment of 20% of the amount owed with your application.

Penalty abatement is yet another way to resolve your delinquent taxes. This is acknowledging that you owe the amount, but you are requesting the penalties be removed.  You will need to write a letter to the IRS explaining why you did not pay or file.  Extended illness, divorce, long periods of being unemployed, loss of a home or personal records are just a few of the reasons that the IRS will consider the reason legitimate.

Tax Settlement Companies

When you do not have the knowledge or the courage to battle the IRS alone, tax settlement companies can help. Many companies employ a tax settlement attorney who will work to reduce your taxes owed first, and second, to create a repayment plan that you can afford.

There are different methods used to settle taxes, the most common of which is an installment plan.  Normally the IRS will keep you in good standing when you make timely payments.  A partial payment agreement is another plan where you pay a small percentage of the original debt.  The payment must be made in full, but it could offer substantial savings.

Uncollectible is another option.  This simply means that the IRS can determine that you cannot pay and will stop collection actions against you.

Typically, the IRS has 10 years to collect delinquent taxes.  Experienced companies will argue the Statute of Limitations law where the IRS legally cannot collect on any amount owed beyond 10 years.

Dealing with tax settlements can be overwhelming, especially if you try to do it yourself.  Hiring a reputable tax settlement company is one way to get out from under your tax debt and save you money in the process.