3 Ways To Settle IRS Tax Debt
A Resolution of IRS Tax Debt
It's important to review all your options before beginning a resolution of IRS tax debt. There are several ways you can handle it, even if you believe the IRS is gunning for everything you own. It's essential that you settle your debt as quickly as possible, considering that hefty penalties can accumulate.
The IRS has become much more tax-payer friendly over the past few years, and they offer helpful information over the phone and via the internet. The IRS website is a valuable resource for taxpayers, and many forms and publications can be downloaded for free.
You can settle IRS debt in the following three ways: First, offer them a compromise. This is the one most people probably think of first. You basically hope the IRS will accept an offer from you that doesn't add up to the total of what you owe them.
IRS Tax Debt
It's important to keep in mind that the IRS requires that the taxpayer must be in extreme difficulty in order to be accepted. Statistics show that they only accept ten to fifteen percent of all offers received by them. Your offer should equal or exceed what the IRS believes they can collect from you through their assorted collection methods.
A second option to consider is entering into a partial payment installment agreement with the IRS. With this choice, you and the IRS sign an installment contract where the taxpayer can select from several different repayment plans. For the 2009 tax year, the IRS tacked on an additional fee of over one hundred dollars for processing installment agreements online.
The last option you have is the tax penalty abatement. If a taxpayer owes the IRS significant penalties, as well as their original balance, they might be able to get the penalties wiped out. Of all the options, this one is the easiest route for many taxpayers. The IRS is generally open to participation in the penalty abatement process and encourages people to review all their options using their online resources.
If you're more confused than ever, however, don't worry about having to choose a path immediately. Focus on each one individually, and consider it carefully before moving on to the next. If you don't know where to start, you can always get in touch with a professional tax preparer. They are trained in current IRS regulations and practices, and will explain every option in greater detail. This will enable taxpayers to make an intelligent choice on which plan suits them best. There are also quality tax preparing companies like H&R Block who have become powerhouses in the field, providing valuable services to taxpayers at a minimal cost.
A careful review of the foregoing options will enable taxpayers to make an intelligent choice on the best way to eliminate their IRS tax debt. They can consider (1) making an offer in compromise; (2) agreeing to a partial payment installment plan; or (3) going through the penalty abatement process. By selecting one of the foregoing methods, taxpayers can be assured that their debt will be settled for less.