IRS Tax Settlement: Settle For Less Than What You Owe

April 15, 2012 by  Filed under: Taxes 

Many individuals owe back taxes to the IRS that they are unable to pay. Thousands have had IRS levies put on their wages, bank accounts or are receiving frightening letters. They live in fear of the IRS showing up at their door, or seizing their personal belongings. Some have not filed taxes in several years. Many choose to ignore the IRS. Typically ignoring the IRS will make the situation worse.

You are allowed to hire an experienced professional to represent you before the IRS so that you will not have to deal with them. A tax professional with experience will know the tax laws and understand how to work those laws to the taxpayers advantage. A professional will be able to thoroughly evaluate the taxpayer’s current financial ability to pay the tax debt back and to see if they would qualify for one of the IRS programs to pay less than the amount owed.

There are primarily 3 IRS programs to settle a tax liability for less than the full amount that is owed:

An IRS Offer In Compromise

This is a onetime IRS tax settlement where the taxpayer and the IRS agree “to settle” the tax debt in a onetime settlement where less than the tax liability is paid. The IRS has very strict guidelines when submitting an Offer in Compromise. This includes disclosing financial and assets information. Either the taxpayer or the taxpayer’s representative will work one on one with either an Offer in Compromise tech or a revenue officer. That is why it is important to know the tax laws and the correct procedure and forms for submitting an Offer in Compromise. Individuals and businesses may submit an Offer in Compromise. Payroll taxes can also be compromised with an Offer in Compromise. This process takes approximately 6-9 months.

Partial Payment Agreement

This is method where an installment is established to pay less than the tax liability because the tax payer can’t make the payments and pay the tax debt back in a regular installment agreement. It will allow monthly payments that will add up to less than the tax liability that is owed. This agreement will also financial disclosure. The tax payer will also be subject to assessment by the IRS to see if they can raise the amount of the payment or end the agreement caused by a change in financial capability.

A Penalty Abatement

Penalty abatement allows the taxpayer to remove all or part of the penalties owed. Typically the interest and base amount is not abated, only the penalties. “Reasonable Cause” must be given to the IRS as to why the taxes were not filed and/or paid. There are only general guidelines on what the IRS considers “reasonable cause” and it is handled on a case by case basis.

Though seemingly a great way to eliminate tax debt quickly, not everyone qualifies for the previously mentioned IRS Tax Settlement programs. It is important to hire a professional who will take the time to prequalify you based on your unique situation.

Cynthia Kuhne has been helping people resolve their tax problems successfully for over 16 years. She is a licensed Enrolled Agent with both the knowledge and experience to handle the toughest IRS tax settlement cases. She is the founder and president of CKTax Inc., a full serviceIRS tax settlement company with an “A+” BBB record. If you have a tough tax problem, visit or call 888-894-2005.

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