There are a few things you should know about tax debt
It is possible to sometimes wipe your tax debt clean at an enormous discount. If you qualify for something known as the Offer-In-Compromise (OIC), the IRS will generally accept less than the amount a taxpayer owes on a tax bill.
A few things you should know if you or someone you know is considering making a settlement offer to the IRS:
- To qualify for OIC consideration, you must show the IRS that there is doubt as to whether they will be able to collect the debt from you now or in the foreseeable future. The IRS generally cannot accept a settlement offer if the taxpayer can afford what they owe. In this case, exploring other options, such as installment payments, may be more appropriate.
- If there is doubt that the taxpayer is unable to pay the liability, they must prove the circumstances under which paying the bill in full would cause economic hardship.
- There are situations where taxpayers bring up doubt as whether the tax liability is correctly assessed, and though this is a legitimate concern to raise, it’s often hard to prove.
- Taxpayers must be in compliance, meaning all required tax returns have been filed.
- When applying for an OIC, an initial payment may be mandatory, and will reduce the amount of tax owed.
Taxpayers need to know the IRS will ask for lots of financial documentation such as pay stubs, bank records, vehicle registrations, asset account information, and a host of other items.
You’ll have to take time to meet with IRS Revenue Agents who may show up at your home or place of business. Needless to say, the whole process can be time-consuming and often grueling.
Some prefer to deal with the IRS themselves when seeking tax relief but later learn it’s better to seek professional representation to help them deal with the case. Think about this, representing yourself before the IRS is like going to court without a lawyer. Do you really want to take that risk?
If you’re considering an Offer in Compromise or other tax relief options to settle your tax debt, seek the help of a local enrolled agent, tax attorney, or CPA who specializes in tax resolution services.
Enrolled agent Angelia White serves as a tax advisor, financial consultant, and certified tax resolution specialist with AcctPier Business Solutions LLC. For more helpful tips and information, visit www.acctpier.com.