Every year, American taxpayers owe out billions of dollars in tax debt. As such, it leaves many people wondering if there are ways to negotiate their tax debts with the IRS.
In this guide, you will learn whether you have options to do so and what steps you need to take to start negotiations.
Offer in Compromise
In the event that you are unable to pay your tax debt in full, the IRS has an option called “Offer in Compromise.” Essentially, this option lets you settle the tax debt you owe for less than the full amount.
The IRS considers whether paying your debt in full will create a financial hardship on you, or you simply are unable to do so. As such, there are some unique circumstances that can play a role in your approval of an Offer in Compromise, including:
- Your ability (or inability) to pay your tax debt
- The equity in the assets you own
- Your current expenses
- Your current income
When the IRS approves an Offer in Compromise, it considers whether the offer is a reasonable amount to expect from you within a set timeframe. But before you request an Offer in Compromise, you should check to see if you can set up a simple payment plan.
Many times, the IRS will allow you to make monthly payments on your debt until you have paid it off in full. If you’re unsure whether an Offer in Compromise is right for you, it is best to secure the services of a trusted Certified Public Accountant (CPA).
They can assist you in finding the best course of action based on your needs, thus allowing you to make payments to the IRS comfortably.
How to Proceed
If you believe you require an Offer in Compromise to settle your tax debt, the first thing you should do is make sure that you qualify. You must also ensure that you have filed all of the correct tax returns. Otherwise, the IRS will return your application.
You can be certain that you don’t overlook anything by hiring a qualified CPA in your area. In doing so, your CPA will carefully assess your financial situation and start negotiations with the IRS if necessary.
Certified Public Accountants are very knowledgeable in dealing with the IRS and can play a vital role in securing the best payment arrangement for your needs.