Can You Reduce Your IRS Tax Debt?

IRS Tax Debt

IRS Tax Debt

When the IRS wants their money – they want their money. The best way to settle up with them is, of course, by paying your IRS tax debt in full. What if it’s an exorbitant amount and you just can’t afford it? What happens then?

To reduce the impact that unpaid taxes have on your financial well-being, credit, and on your life, there are some steps you can take. Here’s what’s important:

  • Don’t ignore the situation.
  • Get realistic about it and figure out what needs to be done.
  • You may need professional help, depending on how much you owe, or…
  • You may be able to work with the IRS on your own.
  • The important thing is to deal with the situation in an expedited fashion.

Don’t put off dealing with tax debt. It isn’t going to go away – rest assured.

Offer in Compromise!

When you owe a certain amount to the IRS, but you want to try to settle for less than that amount, you may be able to settle your tax debt through an OIC or offer in compromise. The following circumstances and facts will be considered to determine whether or not you qualify:

  • Asset equity
  • Expenses
  • Income
  • Ability to pay

While this is something that you can do on your own, you will be better represented – and acquire a better understanding of what’s going on – if you seek the help of a professional.

Offer in Compromise and the IRS!

If the following three difficulties are faced, you may be able to get an offer in compromise:

  • If there is doubt as to liability, the IRS can accept the compromise. Compromise meets this only if, under the law, there is a genuine dispute where the amount or existence of the correct tax debt is concerned. If both the IRS and you doubt the liability under the circumstances, they may let you proceed with the compromise.
  • If there is doubt that you owe an amount that is fully collectible, they can accept the compromise. In a case where the taxpayer’s income and assets are less than the full tax liability amount, doubt as to collect ability may exist. Example: This year, your business is struggling to stay afloat even though you had a bumper year last year. Just when you need it least, the tax demand will come in. You don’t have the income or the assets to sell to pay the money you owe.
  • Based on effective tax administration, you may get the IRS to accept the compromise. Even though you can’t pay the full amount, there is no doubt that you legally owe it. But, if you had to pay it in full, due to exceptional circumstances, it would be inequitable and unfair; or it would create an economic hardship. Example: To meet your liability, you’d either have to go out of business or sell equipment that you need for your business to function. Your business could be saved, however, by an offer in compromise.

The IRS will work out how much – without causing severe hardship – they can reasonably expect to receive from you. They’ll look at your assets and your income. A reasonable collection potential will be determined. There are legal requirements where compromises and acceptance are concerned. The value of a taxpayer’s assets is determined by the IRS to figure out what their ability to pay is. To that, they’ll add the value of the taxpayer’s future ability to pay. Those two components will combine for the RCP or Reasonable Collection Potential.

Getting an Offer in Compromise!

Trying to get an offer in compromise on your own is a high order. You’re much better off acquiring the services of a tax resolution specialist. This way, the entire process will be easier to understand, courtesy of the explanations they can give you every step of the way.

Make no mistake – this isn’t the “easy way out”. It’s no walk in the park. But with the assistance of a professional team, the process will run smoother and feel less intimidating.

An upfront fee:

  • There is an up-front offer in compromise application fee for businesses.
  • The fee for businesses is waived if the offer in compromise is for an individual and they meet certain criteria.
  • The fee will also be waived if the offer is because of a tax liability dispute.

You must be able to prove to the IRS that you simply can’t make your liabilities due to your circumstances. This is another area in which a tax advisor will be beneficial. You have to attend to your family, business, etc., so leave the time-consuming piles of paperwork to the professionals.

For this financial year (or any previously) you will receive no tax rebate if you apply for a compromise. It won’t count toward your settlement and will simply be written off.

Ways to Pay!

If you do manage to be accepted for an offer in compromise, you have two options of settlement:

  • Periodic payment offer – For those struggling, this next situation frequently applies more often than not. A payment of thousands of dollars over a one-year period simply may not be within your capabilities. If this applies to your predicament, a repayment plan will be agreed upon which may include 24 payments (monthly). Along with the OIC application, you’ll enclose your first payment. While the compromise is being considered, you have to pay your offer monthly. Even if the IRS demands more money or rejects your offer, these payments are not refundable.
  • Lump sum cash offer – A repayment amount will be agreed upon. A 20% down payment will be made by you. To settle the compromise, you’ll make five or fewer additional repayments. These payments are nonrefundable and actually made while your offer is under review by the IRS.

What If You’re Turned Down?

Not everyone qualifies or is approved for an offer in compromise. In fact, you may not even be able to offer a compromise if you have live bankruptcy proceedings going on or you’ve filed for bankruptcy. Also, you must also be up to date on paying your taxes. But, regarding the IRS, as long as you did everything by the book, tax burden leniency may be considered.

If, even while making payments, your offer is rejected, there is a process for an appeal. Once again, however, it’s no walk in the park and it can be long and involved. Also, once again, you’re better off with a tax resolution specialist on your side at this stage of the game.

Hiring Professionals!

If the IRS determines that, to collect taxes from you, it would be virtually impossible, an offer in compromise may be agreed upon. It should never be considered a way of avoiding your taxes, nor should you look at it as an easy way out. There’s nothing easy about it, in fact. It can be made marginally easier by having the right professional team on your side, nonetheless.

“The Taxman” will hunt you down if you fail to pay your taxes, rest assured. There is no avoiding it. Even some of the nation’s biggest celebrities have fallen victim to the IRS and either had to pay exorbitant amounts of back taxes or, worst case scenario, been jailed for failure to pay taxes owed. To avoid either of these, some celebrities have left the United States and can no longer return without risking prosecution by the government.

Nobody wants that for you. Better to just figure out a way to make the IRS happy while not completely draining your coffers.

To protect your family, yourself, and your finances from looming tax debt and its devastating effects, you may need a focused tax relief advocate. This is a professional who specializes in averting property seizures, eliminating bank levies, ending wage garnishments (or preventing wage garnishments in the first place), and settling tax debt. They’ll help you enjoy a tax debt anxiety-free life and ensure your financial stability.

In any lawsuit, effective representation is crucial. This is particularly the case when dealing with the IRS – a multi-billion-dollar corporation. The most powerful entities in the country are the State Tax Boards and the IRS. On the other hand, you have rights! To preserve your livelihood, you may need someone to help you defend those rights. Someone to help protect you against the federal and state bureaucracies. Someone who can objectively look at your situation and assist you in achieving the most favorable outcome.

You want a team with comprehensive knowledge of tax law nuances and years of experience. The difference between a life of paralyzing debt and financial freedom can be the right defense and legal expertise.

So, who do you turn to?

The Best Way to Reduce Your IRS Tax Debt – Defense Tax Partners!

We are Defense Tax Partners. With our assistance, you have a much better chance of:

  • Resolving sales and payroll tax debt
  • Stopping or preventing bank levies
  • Stopping or preventing property seizures
  • Removing IRS tax liens
  • Stopping or preventing wage garnishments
  • Removing penalties and interest charges
  • For a fraction of what you owe, settling your IRS tax debt

Dedicated to protecting businesses and individuals from IRS tax debt devastation, we are a tax advocacy service. Don’t let an IRS tax problem jeopardize your life and negatively affect your financial future. For people with tax problems, the most desirable solution can be that of an IRS offer in compromise.

About Defense Tax Partners 1 Article
Defense Tax Partners is a tax relief advocate firm that specializes in settling tax debt, ending and preventing wage garnishments, averting property seizures, and eliminating bank levies. With years of experience dealing with the IRS and State Tax Boards, the legal team at Defense Tax Partners has comprehensive knowledge of the nuances of tax law to help you fight your legal cases.

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