Ways To a Settle Your IRS Tax Debt, Former IRS Agent Explains + How To Settle Your Case

August 13, 2019
Written by: Fresh Start Tax

 

Fresh Start Tax

There are different ways to settle your tax debt, as a former IRS agent I have worked thousands and thousands of cases probably nearing 10,000 and with that it is important to know that if you have a tax debt you must eventually get your case off the IRS  enforcement computer.

 

The computer called the CADE2, is a computer monster that will send out to any taxpayer who does not respond to 2-5 collection notices, tax levies, tax liens and wage garnishments. Ouch!

After IRS sends their series of dunning notices and the taxpayer has not responded by letter or voice to the automated collection systems, the computer takes over and that starts the systematic cycle of enforcement action till the taxpayer cries uncle.

It is usually at this point we get involved.

Many taxpayers do not respond to IRS’s final notice and bury their head in the sand hoping this will go away but IRS’s computer system will not stop until they laser in on their target.

As a general rule a, wage levy, a bank levy, or a federal tax lien will force the taxpayer to call Internal Revenue Service or Fresh Start Tax if they are smart.

 

What to expect when you call IRS. DO NOT DO THIS BY YOURSELF!

 

When you call IRS because you have a tax debt, you will find that the Internal Revenue Service is trying to do two things.

1.IRS will want to make sure all your tax returns are current/filed with IRS, which also includes current withholding or estimated payments, and,

2. IRS will  take a current financial statement to find a way to close or settle your debt with the IRS.

IRS needs to close your case out of the IRS inventory of open collection cases.

IRS generally will want a current financial statement on a form 433A, or 433F.

That financial statement will have to be documented with items like: pay stubs, six months worth of bank statements, copies of all expenses and to verify any number placed on that financial statement.

After IRS does a careful review of your documented financial statement they generally will make one of three determinations on how they will close your case and take it off the IRS enforcement system.

After a careful review of your financial statement, 40% of all taxpayers find their case in a currently not collectible or hardship status.

 

What does a hardship status means.

It means IRS puts freeze code on your Social Security number from 1 to 3 years and will send your case back out to the field to review at a later time.

The good news is that you don’t have to worry about IRS for a couple years but the bad news, penalties and interest will run at some point in time you will get a letter or a knock on the door to start the process all over again.

 

The next closing method IRS may employ is an installment payment or payment plan.

After review of your current financial statement, IRS may determine according to their national standards you have excess money, that you over the guidelines what IRS expects for expenses based in your geographic region.

There are different types of payments plans and when you call us we will review the process of payment or installment agreements.

6.5 million taxpayers enter into monthly payment plans with the Internal Revenue Service.

 

The next method of closing is the offer in compromise or, the tax debt settlement or even the pennies on the dollar.

As a former IRS agent I was a teaching instructor of this offer program and I am a national expert in certified to teach this program to other tax professionals.

 

An offer in compromise is granted because the Internal Revenue Service feels they will never collect a debt based on your current assets and current income expense ratios.

There is a pre-qualifier tool that you can walk through and I encourage all taxpayers to do that.

Last year 32,000 offers in compromise were accepted out of the 78,000 offer in compromise filed. The average settlement was $9500 but remember that is an average across the board settlement.

Keep in mind  that if you owe back tax debt IRS puts a freeze on your Social Security number and any refund will be sent to the Internal Revenue Service.

There are two other closing methods that you need to be aware of.

The filing of the chapter 7 bankruptcy and the statute of limitation expiring. Those can close your case as well.

When you call us you can find out if you’re eligible and we can walk you through the tax provisions.

If you’re lucky enough the statute of limitations will expire.

The statute of limitations runs 10 years from the date of assessment.

There are some exceptions that can add time to this  rule such as the filing of an offer in compromise, the filing of a CDP, litigation, bankruptcy or a few other things.

 

It is also important to remember that all tax returns must be filed.

IRS will not deal with any case or close  any case all their enforcement computer unless all tax returns are up-to-date and filed.

If you have not filed your back tax returns we can do so.

If you’ve lost your records we can reconstruct your tax returns. Our former IRS agent managers and supervisors can prepare  a tax return by tax reconstruction quickly and affordably.

If you have any questions call us today and we will explain the different processes on how you can settle your tax debt.

 

Ways To a Settle Your IRS Tax Debt, Former IRS Agent Explains + How To Settle Your Case

Filed Under: Tax Help
Tags:

FREE

Consultation

No Obligation
We are here to help!

  • Should be Empty:
“Thanks to Fresh Start, I am feeling more and more confident about finally getting caught up after all these years.”
M. Johnson

“I will certainly refer anyone I come across who needs your services for sure.”
Jody and Don

“I cannot thank you enough for handling my IRS issues. After dealing with another office who did nothing, you guys did everything that you promised. Thanks again, especially Steve Jacob for guiding me every step of the way.”
Jerry H.