TAX ACCOUNTING NEWS
You may have heard on the radio, TV, or online, that you can settle your tax bill for less than what you owe. But are these claims true? Can you really settle your tax debt without hurting yourself in the long run?
Some nationally advertised tax resolution firms offer very little service, so it would be wise to research reviews for these firms on sites such as Google and Yelp. It is important to determine who you can trust by educating yourself on your tax resolution options.
It's no easy task to get the IRS to settle for less than you owe, though some tax assistance agencies might lead you to believe otherwise. However, it is possible if you qualify for an IRS program known as an "Offer in Compromise". Settling isn't necessarily a bad thing.
An "Offer in Compromise" is a negotiated settlement between a taxpayer and the IRS, which is intended to help taxpayers who owe more than they can afford to pay. In many cases, you can settle your entire tax bill for a fraction of what you owe — if you qualify. You will only be considered if you genuinely can't afford to pay back taxes or if doing so would cause extreme hardship. This can apply, for example, if you have become disabled.
Requirements for eligibility include:
You must be current on all legally required income tax returns.
You must be current on any estimated tax payments if you are self-employed.
You are not in an open bankruptcy proceeding.
The IRS would prefer an offer in compromise rather than send your case to collections and potentially retrieve less money. Taking an offer in compromise will not affect your credit score and it is likely to be a better financial decision in the long run.
However, working out what offer to make on your own and learning the whole process can be challenging, much like representing yourself in a court of law without a lawyer. It might be advisable to seek the assistance of a tax resolution specialist who can help you with the process, see if you qualify and then determine what you will be required to pay. A qualified tax resolution specialist will be a licensed CPA, Enrolled Agent or an Attorney.
The benefit of working with a qualified tax resolution firm is that you obtain protection from the IRS, allowing you sleep better at night knowing you're on your way toward a permanent tax resolution. They may also be able to head-off any impending garnishments of your paycheck or levies on your bank account.
Settling with the IRS is a good thing and is often the best answer to dealing with your back-tax bill and moving on with your life.
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