Many taxpayers rely on tax professionals such as accountants, tax attorneys and certified tax resolution specialists to help prepare their taxes. Often, they do this to simultaneously increase their chances of winning a tax settlement and dealing directly with the IRS as minimally as possible. When you owe the IRS money, it can be a very stressful and intimidating situation. The Internal Revenue Service can do a number of things to get its money that you owe, including place a lien on your property, seize your assets and put a garnishment on your wages.
Sadly, most people don’t realize that these scenarios can be prevented if they contact the IRS to explain their situation. Surprisingly, the IRS will work with taxpayers so that they are more easily able to pay back taxes they owe. Here are a few options that are available to you so that you can settle your tax debt and pay less than what you owe:
If you believe you might be the victim of fraud like a Ponzi scheme and have lost most or all of your investment, you can be eligible for taking advantage of the United States Tax Code law to recover 30 to 40 percent of your loss. This is an option that is extremely involved and technical and can be granted when you explain your situation to an IRS specialist. You may be able to work with a professional to have your taxes from prior years reduced. In turn, it can lead to you receiving a refund with interest included.
Partial Payment Installment Agreement
The IRS offers consumers a new debt management program in which it is possible to pay off debt on a long-term basis. This DMP allows for the repayment of a considerably reduced amount of money as well. It works similarly to paying off a credit card balance and lets you pay your back taxes in installments instead of in one single payment. The best way to get the lowest rates possible on this option is to enlist the help of a tax debt lawyer or certified tax resolution specialist.
Offer in Compromise
Offer in Compromise is a program that allows you to pay a small amount of money to the IRS as your full payment of back taxes. This is an option that is in place for individuals who are unable to pay the full amount they owe on their taxes. The program can help you to save a great deal of money, specifically thousands in back taxes, interest and penalty fees.
Currently Not Collectible
Currently Not Collectible means that the individual has no physical ability to pay their taxes. Generally, it is a program where the IRS agrees to not collect a taxpayer’s debt for a year or longer. As a result, the IRS can deem you “currently not collectible” because of proof that you have no ability to pay. This can greatly help if there is the threat of a lien, seizure, levy or denial or termination of an installment agreement.
Credit Card Debt Settlement
Credit card debt consolidation can be done either through a debt settlement company or on your own. The latter is the best way to lower the amount of debt you owe to the IRS in back taxes. To negotiate with the IRS, you must compose a letter or debt management plan that details how you would be able to pay back your debt. Sometimes, the IRS will be willing to overlook interest and penalty fees tacked onto your debt and just accept the amount you owe without that additional money.
File for Bankruptcy
Although it should only be used as a last resort option, you can file for Chapter 7 or Chapter 13 bankruptcy if you meet certain requirements. Chapter 7 allows for a full discharge of your debt, while Chapter 13 lets you rely on a payment plan to pay back some debt.
Release Wage Garnishments
It can be very overwhelming when you owe a lot of money to the IRS, especially when it can garnish your wages, put a lien on you and more until your debt has been paid in full. However, you may be able to negotiate with an IRS specialist to have the wage garnishment modified if you no longer have enough money to reasonably live.
Stop the IRS from Levying Your Bank Account
The IRS can put out a levy on your bank account to collect taxes you owe. When this occurs, the bank if required to deduct an amount available in your account that day and deliver it to the IRS within 21 days. You can request a release of the levy from the IRS to ease this burden.
If you have inherited your spouse or ex-spouse’s tax issues, you can unburden yourself. If you have proof of your situation and that it meets IRS guidelines for innocent spouse relief, you can be excused from having to deal with your spouse of ex-spouse’s tax debt.
Be Mindful of the Statute of Limitations Expiration Date
The statute of limitations for the IRS to collect back taxes, interest and penalties from a taxpayer is 10 years. After that time has passed, it can no longer collect from you. You can get help from a CPA, tax attorney or tax resolution specialist to resolve the issue of your debt in this area.
One or more of these solutions may be just what you need to settle your IRS tax debt. Consider the one that best suits your needs and you will be relieved of your financial burden sooner rather than later.