Settling an IRS Tax Debt: Step by Step Guide
While the Internal Revenue Service (IRS) doesn’t act like a debt collector for Americans, it can certainly be a beast to deal with. Since the IRS acts on behalf of Uncle Sam, they have a good deal of authority that regular collection agencies don’t. Even though they’re not going to harass you all the time, they’re more than capable of garnishing your wages!
Fortunately, the following steps can go a long way toward settling your debt for good.
File for Monthly Installments
If you can’t pay off your debt in the foreseeable future, then consider filing for monthly installments to help you pay off what you owe the IRS. While you might balk at the application fee, you get the option of paying a fixed regular bill if you’re approved. You might not think that you’re making a huge dent in your total burden, but you’d be doing more than enough to help pay things down.
A tax professional can help you prepare the necessary IRS forms to file for an installment agreement.
Determine Your Reasonable Collection Potential
By providing detailed information about your current financial situation to the IRS, you can help them to determine your reasonable collection potential or RCP. Your total RCP includes things like possible future income and any investments or credit lines you might have. If your RCP is low enough, then you might be able to negotiate an offer and settle a compromise. When the IRS approves this kind of offer, they agree to accept less money than you owe overall.
Request Relief for Married Couples
If you’re married and filing a joint return, then the IRS has three special relief programs that can help. Innocent spouse relief can cut any additional taxes you might owe because your spouse or former spouse didn’t report some earned income. You may qualify for equitable relief if your return was filed properly but taxes weren’t paid with the return. Separation of liability relief could apply if you’re legally separated from your spouse. In all three cases, these programs will take away any tax debt that’s not legally yours.
File for Penalty Abatement
Part of your debt more than likely includes penalties, and this can be a substantial figure for those who are self-employed. Taxpayers who haven’t had significant problems in the past can request a penalty abatement. If you didn’t need to pay penalties for the last three years and you made sure to file returns, then the IRS might dramatically reduce the amount you owe. You’ll still need to pay the original taxes due, however.
Request Professional Tax Relief
One of the most important steps you can take to settling your IRS tax debt is getting in touch with a professional. Taking quick decisive action will reduce the risk of additional interest, penalty fees accruing on top of your debt, and even bankruptcy. Success Tax Relief has helped countless other taxpayers who are in the same boat as you. Contact us online and request a free consultation or give us a call at 877-825-1179 and speak with a professional today.