OWE the IRS – Several Options to choose to Settle Tax Debt 1-866-700-1040
Being a former IRS agent of 10 years there are many misconceptions about owing debt to the Internal Revenue Service. When a taxpayer owes money to the Internal Revenue Service there are three basic ways the IRS deals with the taxpayers or businesses tax debt. There will be a program that is just right for you based on your current financial abilities.
First order of business – IRS will need a current financial statement
Any time you owe the IRS back tax to the IRS, a detailed documented financial statement 433 A,F,OIC are used by the IRS to make a determination as to the closing method of your case.
IRS spends a great deal of time pouring over this financial statement to ensure the accuracy and correctness of the statement.
Anything you put down on the statement must be verified when you over the IRS money. This will include things like your last three to six months bank statements, and copy of your pay stubs and any and proof of all expenses that you have.
With that in hand the Internal Revenue Service will make a determination on how to best settle your case.
It is a general rule there are three typical options used by IRS to settle your current tax debt.
IRS Tax Settlement Agreements can be in different forms:
a. Hardship Settlements.
About one half of all cases in which taxpayers own money wind up in the economic hardship category. These cases usually go into a 3 year suspended status because of an inability to pay.
This is also called currently noncollectable. Your case will go into a hardship status because you do not have the income coming in to meet your current expenses.
The IRS will use the National Standards Program to assess hardship. Before you get all hyped up about being placed into an economic tax hardship please understand there is a national standard tests that will be used and applied against all monthly income and expenses. You can check our website for the national standardized expenses for your area or region.
b. Payment Agreements or installment agreements.
Cases can be closed with agreed upon monthly installment payments to the IRS. IRS has different type of payment agreements they should check with us about your particular situation so we can ensure that you are getting the very best option available to your current lifestyle.
IRS also offer streamlined agreements and long-term agreements and vary depending on the amount of money owed and of course your financial statement.
c. IRS Offer in Compromise.
There are three types of OICs:
The IRS may accept an Offer in Compromise based on three grounds:
1. Doubt as to Collectibility.
Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
2. Doubt as to Liability.
A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include:
(1) the examiner made a mistake interpreting the law,
(2) the examiner failed to consider the taxpayer’s evidence or
(3) the taxpayer has new evidence.
3. Effective Tax Administration / Exceptional Circumstances.
There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC.
To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
The new IRS program on Direct Debit Installment Agreements and Liens
The IRS is making other fundamental changes to liens in cases where taxpayers enter into a Direct Debit Installment Agreement (DDIA).
For taxpayers with unpaid assessments of $25,000 or less, the IRS will now allow lien withdrawals under several scenarios:
Lien withdrawals for taxpayers entering into a Direct Debit Installment Agreement.
The IRS will withdraw a lien if a taxpayer on a regular Installment Agreement converts to a Direct Debit Installment Agreement.
The IRS will also withdraw liens on existing Direct Debit Installment agreements upon taxpayer request.
Liens will be withdrawn after a probationary period demonstrating that direct debit payments will be honored.
In addition, this lowers user fees and saves the government money from mailing monthly payment notices. Taxpayers can use the Online Payment Agreement application on IRS.gov to set-up with Direct Debit Installment Agreements.
New Program on Installment Agreements and Small Businesses
The IRS will also make streamlined Installment Agreements available to more small businesses. The payment program will raise the dollar limit to allow additional small businesses to participate.
Small businesses with $25,000 or less in unpaid tax can participate. Currently, only small businesses with under $10,000 in liabilities can participate. Small businesses will have 24 months to pay.
The streamlined Installment Agreements will be available for small businesses that file either as an individual or as a business. Small businesses with an unpaid assessment balance greater than $25,000 would qualify for the streamlined Installment Agreement if they pay down the balance to $25,000 or less.
Small businesses will need to enroll in a Direct Debit Installment Agreement to participate.
Offers in Compromise Settle Tax Debt for “pennies on a dollar.”
The IRS is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers.
This streamlined OIC is being expanded to allow taxpayers with annual incomes up to $100,000 to participate.
In addition, participants must have tax liability of less than $50,000, doubling the current limit of $25,000 or less.
An offer-in-compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.
Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement.
The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
Pre-qualifier tool to Settle Tax Debt
To check whether to see you qualify for offered compromise or tax debt settlement because of the money you owe IRS simply go to our website and search for the pre-qualifier tool. It will instantly let you know whether you qualify for an IRS tax debt settlement or offer in compromise. Do not waste your money to firms promising or guaranteeing you that they can settle your debt for pennies on the dollar.
Call us today and we can review all your options with you and help you understand the different ways you can settle your tax to your tax debt.
OWE the IRS – Several Options to choose to Settle Tax Debt
