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Offer in compromise

4 Ways to Settle Tax Debts for Less Than You Owe

4 Ways to Settle Tax Debts for Less Than You Owe

By on Dec 31, 2015 in IRS, Offer in compromise, Tax Tips | 0 comments

If there was a way to reduce the amount of money owed, isn’t it worth investigating? Being in debt to the Internal Revenue Service (IRS) can become a stressful situation, especially if one doesn’t have the resources to pay down that debt. Believe it or not, there are ways to reduce the amount of money owed to the IRS. This doesn’t mean that these ‘ways’ apply to every taxpayer. These are simply options to determine whether or not one qualifies for such privileges. In order to find out if one can reduce or even get exonerated from his or her tax responsibilities, the first thing a taxpayer should do is call the IRS to confirm the total balanced owed. 1. Call the IRS to Confirm  When it comes to the IRS, never assume. It is easy for some taxpayers to simply look at their annual tax filing to determine the amount owed. This is not always going to be accurate. Depending on whether one is delinquent in paying his or her taxes, if there are any back-taxes owed, etc., there could very well be some tax penalties and late fees added to the original balance. On rare occasions, there could possibly be a reduction to the balance. That is why it is important to call the IRS to confirm exactly what is on the account before writing a check. Calling the IRS and obtaining a mutual understanding regarding the taxpayer’s account balance can help the IRS representative map out a definitive installment agreement.  2. Installment Agreement  Installment agreements are usually the first step to resolving any tax issues. Typically when a taxpayer is informed that he or she owes the IRS, it’s usually an amount that cannot always be paid in full. In situations like this, an IRS representative will arrange an installment agreement. Based on the taxpayer’s annual income, living expenses and amount owed, the IRS along with the debtor’s approval, will issue a monthly payment for he or she to make until the balance if paid in full. If for any reason, the taxpayer is late or misses a payment, the IRS reserves the right to nullify the installment agreement, rendering the full payment due immediately. 3....

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How Much Tax Debt Should You Have Before Getting Help?

How Much Tax Debt Should You Have Before Getting Help?

By on Oct 8, 2015 in Debt Relief, IRS, Offer in compromise, Tax Resolution | 0 comments

How much tax debt should you have before getting help? The chances are if someone is asking that question, then they might want to consider seeking the assistance of a tax relief consultant right away! Ideally, it’s best to have no tax debt at all. However, some issues cannot be helped. Whether you are operating a business or life’s challenges have caused you to somehow get behind on your taxes, there are some solutions for anyone who has found himself or herself in debt to the Internal Revenue Service (IRS). Short-Term Extension There are two ways to immediately know if you owe the IRS or not: 1) Don’t file your annual taxes and 2) After filing, your tax preparer will inform you whether you are getting a refund or you owe the IRS. If for some reason, you end up owing the IRS and discover that you are unable to pay the full amount, it might be helpful to request a short-term extension. This is different from requesting an extension to file your taxes—it’s important to understand that these are two different things. Be sure to inquire about the 120-day extension to pay your taxes. That is, if you know that you are able to pay the debt within four months. Otherwise, you might want to explore other options. Offer in Compromise An Offer in Compromise (OIC) is an option that is rarely granted by the IRS, but nonetheless, it is an option! An OIC is an agreement between the taxpayer and the IRS for the taxpayer to pay an amount that is less than what they owe. So it is certainly worth applying for to find out if you qualify! However, there are some stipulations that are ultimately up to the IRS to determine. 1. The amount of taxes owed can be reduced if the IRS believes that paying the full amount would result in undue hardship for the household. 2. If there is legitimate doubt that you actually owe the amount that the IRS says you owe. 3. If the IRS believes that the debt is uncollectible. Everyone would like to believe that they qualify for these three points. Yet again, it is up to the IRS...

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