If you end up owing the IRS back taxes, one of your first questions might be whether you can take care of it by contacting the IRS yourself or if you need professional help from a Certified Public Accountant or company that is an expert in tax relief.
Faris Khatib from Ideal Tax states that If your debt is manageable and your case isn’t too complicated, you might be able to handle this process on your own if you have a specific goal.
You can contact the IRS directly to negotiate and settle your tax debt. The Internal Revenue Service (IRS) offers options such as an Offer in Compromise (OIC) or IRS payment plans that allow you to reduce your debt. Weighing your options is critical to finding a strategy that will produce results for you.
What Will Happen If I Do Not Pay My Taxes On Time?
The IRS will bill you for the unpaid balance If you don’t pay your taxes when you file. If you don’t pay the bill in full, you’ll have to share the cost with things like interest and a monthly late payment fee. Even if you can’t afford to pay all of your taxes, though, it’s still important that you file. There’s also a failure-to-file fee equal to 5% of the unpaid balance per month; if left unpaid, this could eventually reach 25% of what you owe.
If you can’t pay your entire bill when filing taxes, reach out to the IRS as soon as possible to establish a payment plan.
The IRS has a decade to collect your taxes, penalties, and interest. It is the amount of time the Internal Revenue Service (IRS) has to collect a tax balance legally or the Collection Statute Expiration Date.
Is It Possible To Settle My IRS Debt For Less Money Than What I Actually Owe?
Yes, it’s possible to settle your IRS debt for less money than what you actually owe. This can happen through an Offer in Compromise.
Offer In Compromise:
An Offer in Compromise is a settlement you make with the IRS that allows you to pay less than the full amount of taxes owed. You must provide financial information to the IRS showing that you cannot pay the full amount of taxes and must make a lump sum payment or periodic payments.
The lump sum offer is a one-time payment to the IRS for the full amount of your tax debt. This option allows you to settle your debt quickly, so it’s attractive if you have the money and want to get out from under your debt as soon as possible.
The periodic payment option allows you to settle your debt for less than the full amount, but you must make regular payments to the IRS over a period of time. This option is often more attractive if you don’t have the money to pay the entire tax bill right away.
The IRS considers several factors when deciding whether or not to accept an Offer in Compromise, including your ability to pay, income, expenses, and assets. If accepted by the IRS, an Offer in Compromise can reduce or eliminate your tax debt.
Am I Eligible For An Offer In Compromise?
It is not easy to qualify for an Offer in Compromise. The IRS will review your income, assets, and expenses to determine if you are eligible. You must show that you have a financial hardship or doubt as to the validity of your tax debt. Weighing all of these factors, the IRS will decide whether or not an offer in compromise is a viable option for you.
If the IRS does accept an Offer in Compromise, it can save you money and reduce the amount owed on your taxes significantly. It’s important to speak with a tax professional before attempting to negotiate with the IRS yourself, as they may be able to get better terms than what you were initially offered.
What Other Options To Settle My Tax Debt With The IRS?
There are other options available that you can use to settle your tax debt with the IRS. These include:
This type of agreement allows you to pay your debt over time in monthly payments, but it does not require that you pay the balance in full.
Currently Not Collectible Status
With this status, the IRS will temporarily halt all collection activities such as garnishing wages or seizing assets until your financial situation improves.
If you have been assessed penalties for underpayment or late filing of taxes, you may be able to get them waived if they were due to reasonable cause.
Tax Resolution Services:
You can get tax resolution services from qualified professionals who specialize in helping taxpayers address their tax issues. These professionals can help you negotiate a payment plan or settlement, and they can also provide advice on how to manage your finances in the future.
No matter what options you choose, it’s important to be proactive about dealing with your tax debt. The sooner you get in contact with the IRS, the better your chances are of settling it for less money than what you owe.
The Bottom Line:
The first thing you need to understand is that the IRS is never going to be your friend. They want their money one way or another, and it’s up to you to decide how you’re going to give it to them.
Settling your tax debt by yourself with the IRS is possible, but it’s a complicated process. There are several options available to help reduce your tax liability such as an Offer in Compromise, and other forms of relief. Taking the right steps now will save you time and money in the long run.
If you are unable to pay your balance in full or need help negotiating a payment plan, contact a qualified tax professional who can help guide you through the process. A reputable tax relief company can provide you with the assistance you need to settle your debt with the IRS.