IRS Settlements Offer Help to Individuals and Businesses w/Serious Tax Problems

With tax day behind us, consumers and business owners who owe the IRS are not out of the woods. But while death and taxes are the big two inevitabilities, those with serious tax problems should know that it is possible to negotiate with the IRS to reduce past-due tax penalties and payments.

Americans, carrying more debt than ever, are also more likely to have tax problems than in the past. In 2016, the total of uncollected IRS taxes reached upwards of $458 billion. The IRS uses levies and liens as mechanisms to collect these taxes.

Taxpayers with tax debts under $10,000 usually can manage the payment on their own or via an installment plan arranged with the IRS. Tax problems merit professional help when individuals cannot pay tax liabilities of $10,000 or more.

At that point, tax attorneys can negotiate directly with the IRS on behalf of these consumers, helping them obtain settlements. Depending on the severity of an individual’s situation, two types of IRS settlement are available:

1. An offer in compromise reduces the principal amount owed to the IRS.

2. An installment agreement is a payment plan for the amount due and often includes reduced penalties. Advisors can help you evaluate the situation and determine the amount of taxes owed to the IRS, ascertain whether the situation meets IRS standards for “doubt as to collectability” (i.e., unable to pay the full tax burden), “doubt as to liability” (i.e., you might not owe the tax), or “economic hardship.” Additionally, advisors may assist with determining the full amount owed, including taxes, penalties and accumulated interest as well as determine the best method for managing and eliminating the tax debt and/or cancellation of penalties.