How to Settle IRS Tax Debt?
Got Tax Debt?
How to Settle IRS Tax Debt
Are you in trouble with the Internal Revenue Service (IRS)? I hope not. But, the truth of the matter is that every year, thousands of Americans find themselves in trouble with this agency. Luckily, being in trouble with the IRS is not as bad as it sounds, most of the time. Most of the time, people just have gotten behind in their payments, or have made honest mistakes. Settling with the IRS actually is not that difficult – at least, not nearly as difficult as it seems at times.
This article will teach you how to settle IRS tax debt. But, before we begin, just know that the best advice anyone can give you is to talk to licensed, qualified tax professional, preferably an attorney that has had experience dealing with the IRS regarding tax debt.
There's No Escape
How to Settle IRS Tax Debt: The First Steps
If you owe money to the IRS, they will definitely let you know about it. Very few people can make it through without the IRS ever finding out about delinquent taxes – especially this day and age, when taxes are almost completely computerized. So, if you owe taxes, you will receive notifications from the IRS.
They first will send you a standard notice, stating that you owe a certain amount. They will also give you a reason as to why you owe this money – and give you essentially three options. The first option is that you agree with the IRS and you will pay them in full. The second option is that you agree with them only in part, and will only pay the amount you think you owe. The third option is that you disagree with them fully and will appeal their decision.
With the last two options, you will have to state your case to the IRS. This is the first opportunity you have to settle your debt. If you can prove that you do not owe as much as they said, then you can reduce or eliminate your debt. But, if the IRS determines that you do, in fact, owe, then settling your debt moves to the next level.
They Want You
How to Settle IRS Tax Debt: The Offer in Compromise
Should you decide that you do, in fact, owe the money but cannot pay the full amount, you can request a payment plan. The IRS will usually agree, but beware: they will charge you interest on your total debt. This will mean you will pay more than you originally owed.
An alternative to this is to submit an offer in compromise. This is basically a deal, of sorts. You are offering to pay a reduced amount in taxes because you cannot afford to either pay the full amount up front or pay it out in installments. The philosophy behind this is that the IRS wants as much as it can get. If you can reasonably show that you cannot give them the full amount, they will take what they believe you can afford. (And contrary to popular belief, the IRS does not want to bankrupt you. Doing so means that they do not get paid!)
So, if you are in debt to the IRS, relax; there are ways to settle your tax debt without giving them the shirt off of your back.
You May Also Like to Read:
- Tax Trouble: How to File Back Taxes
No one wants back taxes hanging over their heads or visits from IRS auditors. Take care of your back taxes and stay out of trouble.
More by this Author
A small bedroom doesn't have to be a problem-- with a few tips and techniques you can still create a room that will make you feel like you have a cozy, luxury suite.
Granite is gorgeous, but it is expensive! You don't have to pay top dollar if you want the look-- if you're on a budget, try faux painting for furniture that looks like the real thing!
Love camping? Love Disney? Get the best of both worlds at Disney's Fort Wilderness. Check out this review of this popular vacation destination for outdoorsy families.