Tax Settlement / Tax Negotiation

Understanding Tax Settlement and Tax Negotiations

If you find yourself owing money to the IRS you better believe they will be doing everything in their power to collect it. You, the taxpayer may lack the financial resources to be able to pay, and this may lead to future penalties and interest. The IRS may accept an arrangement with you in which it agrees to accept a lesser amount to retire the original amount. This agreement is referred to as a tax settlement. It is determined based on the prevailing circumstances of the taxpayer and the current tax laws.

Reasons to consider a tax settlement

Negotiating a tax settlement is beneficial in the following ways.

Reduced payments – Considering that the taxpayer’s circumstances meet the qualifications for the tax settlement, the amount due may be lowered. It is easy for the tax authorities to determine and grant the agreement within a short time. The taxpayer is allowed to settle the amount within a given period. After completing the payments as agreed, the account is considered as cleared and will no longer accrue penalties and late fees.

Circumvents liens and garnishments – The law allows tax authorities monies owed by taxpayers using various means such as placing of a claim on their properties. Such a situation means that you might lose your assets or lose control over your money to the IRS.

How to settle your tax arrears

When you have a tax problem, you should hire the services of an experienced tax resolution lawyer to help you. Various solutions have been put in place to help but you need the expertise of an experienced tax resolution service to find what is suitable for your specific situation. Below are some of the methods you can use to pay your tax debt.

Installment agreement – This arrangement allows you to make monthly installments with the aim of paying off the debt.  The US Tax Codes provide relief for people who lose their money through fraudulent investment and other schemes. You can recover up to 40% of the loss suffered, but the process is a complicated and requires the involvement of an experienced lawyer.

Installment plan with partial payments – In this program, the IRS allows you to make the payments over an extended period. The amounts you pay are lower compared to the installment in the plan discussed above. Your lawyer can talk with the tax authority and settle for regular payments that will leave you with something to meet your expenses.

Offer in compromise – Under this option, you are allowed to pay an amount lesser than what you owe. The IRS can let you pay a lump sum amount to settle your account or make installment in a short period. This method offers an advantage as the amount is significantly lower than the total due.

Is tax settlement for all taxpayers?

No. Tax settlement agreements are not available for all people. For you to qualify for the arrangement, you must meet rigorous conditions. The people who often benefit from the method are those in financial difficulties. However, the taxpayer must show proof of ability to settle the amount within the agreed period. If the IRS establishes that you can make the payment, then your request will be rejected.

If you are facing financial problems and you cannot settle your tax arrears, you need to find a debt lawyer to help in tax negotiations with the IRS. For more information about the services, call or visit our offices for professional and helpful advice on your quest.


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