IRS Settlement Agreement: A Step-by-Step Guide
Reaching a settlement with the Internal Revenue Service (IRS) regarding your back taxes may be easier than you think. The IRS has implemented what they call a “Fresh Start Program” to help taxpayers who are struggling to pay their tax liabilities and associated penalties and interest. This program started back in 2011, and has relaxed the way that the IRS approaches tax liens, and has loosened the parameters for applying for an installment agreement and offer in compromise. If you are saddled with a large amount of tax debt and are looking for a way to move forward once and for all, follow these 5 steps to settle your debt.
A Step by Step Guide to Setting Your Tax Debt
Review all tax documents:
The first thing that you should do as you prepare to propose a settlement with the IRS is to review all of your prior tax documents. You should be aware that the IRS looks much more favorably if you have submitted all prior returns (even if you have not paid the taxes due). You should have a solid idea of exactly how much you owe and how far back your debt goes so that you can negotiate with accurate and relevant information.
2. Review all correspondence from the IRS:
Before you submit an application for a settlement, you should review any written correspondence from the IRS so that you are sure that you are both on the same page about your debt.
3. Evaluate your options:
Your two main options for settlement are to request an installment agreement or an offer in compromise.
4. Installment Agreement:
An Installment Agreement allows you to pay back your debt (plus interest and penalties) over a period of time, rather than in one lump sum. If you owe the IRS $50,000 or less, the Fresh Start Program will allow you to pay your debt through monthly direct debit payments over six years. The amount of paperwork to file for this request has been reduced to encourage taxpayers to utilize this option.
5. Offer in Compromise:
An Offer in Compromise allows you to pay back your debt for less than you actually owe if you cannot afford to pay it in full. The IRS will look at your income and your assets to determine how much is reasonable for you to pay, so you should expect to provide significant financial information if you decide to request an OIC. With the Fresh Start Program, the IRS takes into account other financial responsibilities you may have, such as student loans, state taxes, and local taxes when calculating living expenses and your collection potential. These changes improve the chances the IRS will accept your offer in compromise. But, the IRS will not grant an OIC if they think you have the means to pay your debt in full.
6. Decide If You Need Tax Support:
Communicating with the IRS and completing the paperwork for an installment agreement or an offer in compromise can be difficult and even overwhelming. An experienced and respected tax firm can help you navigate this process and give you the best possible chance of settling your debt.
7. Do not wait:
Settling your tax debt will never get easier so take the necessary steps now!
Reach Out to Our Tax Relief Experts Today!
Success Tax Relief can help you with this entire process and even advise you on the best course of action to take for you to get out from under your tax debt, once and for all. For more information or to speak with a member of our tax relief team, call 877-825-1179 or contact us online.