Nobody likes being in debt. Although most Americans thrive on the credit available to them, owing money to the IRS can seem more problematic than other financial obligations.
Fortunately, there are payment plans available. An offer in compromise, for example, could help you get back on track with your tax liability.
The IRS can negotiate
You might be able to reach an agreement to settle your tax debt for an amount less than the amount due. The IRS verifies each applicant’s individual (or business) ability to pay what they owe and factors your financial circumstances into their decision.
It’s not for everyone
If you meet certain eligibility requirements, establishing an arrangement might be possible. Before you explore this option, though, think about whether you:
- Filed your tax returns
- Are current with any necessary estimated payments
- Got a tax bill
- Made the quarterly federal deposits for your business, if applicable
If you meet the criteria, you can submit an offer – along with an application fee and initial payment. But, beyond possible debt reduction, why would you want to submit an offer?
Debt reduction and…?
Clearly, reducing your tax obligation would help your current financial situation. You might also appreciate the seemingly intangible benefits an accepted agreement would provide.
For instance, if you have an existing installment agreement, those payments won’t have to continue. Additionally:
- If the IRS accepts your offer, you can make monthly installment payments or, if you include 20% of the amount you offer along with your application, you can clear up your tax debt in five or fewer payments.
- If the Low-Income Certification guidelines apply to you, you don’t need to pay the application fee, submit an initial payment or make monthly payments while the IRS evaluates your offer.
- If the agency takes more than two years to make a determination about your offer, it’s automatically accepted.
An offer in compromise may also extend the timeframe during which you can pay your bill. Accepted applications generally stop collection efforts as well.
Solutions uniquely designed for you
When you work with an experienced tax attorney, you have a better chance of successful negotiation with the IRS. Robert T. Leonard can help you remain in compliance with the law by helping you understand the best way to approach your unpaid taxes.