Your Pathways To Settle Your Tax Debt

If you are on the receiving end of a final formal notice from the IRS, you have no option other than to settle your tax debt. Your first and best option in avoiding tax levies or IRS liens on your property is obviously to pay up. Unfortunately, you have probably arrived at loggerheads with the tax people because you cannot pay.

But you have options in seeking tax debt relief, and they all involve working closely with the IRS and surrendering to the inevitability that at least some of that debt must be discharged. You can (1) work out a time payment/installment plan with the IRS or (2) submit an Offer in Compromise. Before you can pursue either path, the IRS requires that you:

• File all your tax returns.
• Investigate and consider every other resource you have -- loans, credit card, property you can sell -- to pay off your tax debt. Considering that a tax levy would go after all your assets, you might as well do this yourself before that happens.

 How to apply for an installment agreement

• You can apply online if your tax debt (combined with penalties or interest) is $50,000 or less.
• You can contact the IRS office by calling the number on your bill or notice.
• You must complete their Form 9465, Installment Agreement Request (and Form 433-F, Collection Information Statement if you owe more than $50,000.)

The IRS charges application fees of $52 for direct debit, $105 for a payroll deduction agreement and $43 if your income is below a certain level.

How to apply for an Offer in Compromise

You can settle your debt for less than the full amount you owe by applying for an Offer in Compromise. Your first step is to make sure you are eligible. Go on line to the IRS webpage and complete the Offer in Compromise Pre-Qualifier.

If you are eligible, you can find the step-by-step instructions and the forms you need by going to the links on the IRS webpage Offer in Compromise. You’ll also need to enclose a $150 non-refundable application fee as well as an initial tax installment payment. You can choose a lump sum cash or periodic payment option, but each option chosen must be accompanied with a check.

How to proceed if you have doubts as to your tax liability

The IRS Offer in Compromise webpage has a link to its Form 656-L, Offer in Compromise Doubt as to Liability. It discusses the process and is well worth reading through. The most telling caveats in the document are these:

“You must provide supporting documentation or evidence that will help the IRS identify the reason(s) you doubt the accuracy of the tax debt.

And

“You must include a written statement explaining why the tax debt or portion of the tax debt is incorrect.”

Those two statements alone might convince the average taxpayer that it is time to get some expert tax debt relief help. If you fall within the average taxpayer category, don’t feel alone. The IRS rides herd on a vastly complex Tax Code, along with its own detailed regulations and procedures designed to protect the IRS and its ability to collect revenue.

Given that the auditor, although probably a very nice person, has the job of making you pay up, you should consider getting tax debt relief advice from someone who has your interests foremost. Get your free tax consultation from Optima Tax Relief and start down the road to clearing up your tax debt problems.