Your IRS Settlement Options
In a perfect world, any IRS debt you had would be eligible for a tax settlement. Unfortunately, though, an IRS tax settlement can be elusive and, in some cases, not possible to obtain. When you’re dealing with the IRS, tax debt settlement is not as simple or easy to qualify for as, say, a credit card debt settlement.
There are options available to you, such as the IRS Offer in Compromise, that you may be eligible for. Also, there are tax settlement companies that may offer to negotiate such an offer for you for a fee. Whether you’re dealing with the IRS directly or you’re considering professional assistance, there are a few critical details to keep in mind.
How to Settle With IRS Agents
Technically, you can handle just about any tax issue yourself. But this is a bit like saying that you can handle any repair which your car might require; while theoretically true, there is likely a sharp contrast when you consider the practical reality of such a task. For the sake of argument, though, let’s assume that you want to figure out how to settle with the IRS. You’ll first need to download the appropriate forms from IRS.gov and review them carefully.
When you request an IRS settlement agreement, there are few things you’ll be asked to provide. You’ll need to complete a detailed income and expense analysis, which itemizes your revenue streams as well as your monthly bills. This is significant because by providing such information, you’re giving the IRS a precise idea of your financial resources and which expenses may or may not be considered essential.
If you cannot settle with IRS – that is, if you don’t qualify – you will likely want to request an alternative plan. Your preferences between IRS payment plans will be limited though, largely because the IRS already knows what you can afford (and subsequently what you will qualify for). Another major consideration when requesting to settle tax debt is the fact that the approval time may be as long as a year. Why is this important?
When you attempt to settle IRS debt, the Collection Statute Expiration Date (CSED) is suspended. This date represents the maximum amount of time the IRS has to collect on your debt, which is typically ten years from the date of assessment (the date your liability was calculated). Since it may be as long as a year while you’re awaiting settlement approval and the CSED clock is on hold, this time could simply be tacked on later. This means that you get potentially another year of debt, another year of penalties and interest.
IRS Tax Debt Settlement Best Practices
If, after doing your research, you feel confident that you would qualify for an IRS settlement, you’ll want to consult with a tax resolution company. This type of organization, such as Tax Defense Network, LLC, can review the details of your circumstances and quickly determine whether or not you should pursue tax settlement services. Knowing when not to attempt such a proposition is every bit as important as how you handle it. In any event, a formal resolution can be put into place that will restore your compliance with the IRS in a way that’s affordable to you.