Those who have unpaid tax arrears might do so through IRS-initiated settlement programmes. Some of these alternatives lower your overall tax burden, while others allow you to pay down the remaining sum over time. The Internal Revenue Service does not make it simple to negotiate a debt reduction, thus it is crucial that you select the appropriate settlement strategy. Read this article to learn about tax settlement with the IRS.
What will happen if I don’t pay my tax bill?
Those who owe taxes and don’t pay them are subject to severe fines. There is an increase in total tax expense because of things like late payment fines and interest on the outstanding debt. Interest begins at the federal short-term rate + 3%, and late fines start at 0.5% of the tax debt.
If you let the debt go unpaid for too long, the government will start withholding money from your paychecks and eventually seize your property (including your home and car) to cover the outstanding sum. That might cause you to lose these resources entirely in the long run.
If the IRS sends your tax obligation to collectors, it will have a negative impact on your credit score. This would lead to a worse credit score, making it more difficult to get a mortgage, auto loan, or even a credit card.
If you’ve already begun to feel the effects of this, you might be able to mitigate them by setting up a repayment plan with the IRS (or even negating them altogether). Thus, IRS Tax Settlement is essential.
How to avail IRS Tax Settlement Program?
Avail Offer in Compromise
The IRS can provide you with a tax settlement that allows you to pay a lesser amount of taxes, which is famously known as an offer in compromise. You must convince the IRS through the IRS Tax Settlement Program that you can’t afford to pay what you owe and offer to pay the reduced amount in a lump sum or in short-term instalments.
In evaluating your application, the IRS considers your net worth and also your sources of credit. It will also include credit sources which are credit cards and home equity lines of credit. The IRS will then be comparing it to your monthly expenses and then decide how much relief you will get. Therefore, it’s best to avail irs tax settlement services from experts and get the right assistance.
Apply through Partial payment instalment agreement
The Partial Payment Instalment Agreement (PPIA) programme allows the Internal Revenue Service to accept smaller payments spread out over a longer period of time in exchange for a reduced settlement amount. While you’re making those payments, the IRS may check in on your money if they want to. The collection agency may request a higher payment or take additional action to pursue the original debt if it determines that your financial status has improved.
You must exhaust all other debt repayment options before applying for a PPIA. Alternatively, the IRS may demand that you liquidate the equity in such assets (such as your home) to settle the debt.
One can easily apply for it through availing irs tax settlement services via a Collection Information Statement and Form 9465. Additionally, you’ll have to consent to a review of your finances every two years.
Get the benefits from Innocent Spouse IRS Tax Settlement Program
Even if you and your spouse are officially divorced, filing a joint tax return makes each of you personally liable for any underpayment. However, if one spouse or ex-spouse is hiding tax debt from the other, the IRS does provide some assistance.
In the event that one partner can prove that the other omitted to declare income, reported income illegally, or used deductions or credits that weren’t authorised, the deceived partner may be able to get out of paying taxes.
As the spouse seeking remedy, you must prove that your partner intentionally deceived you by failing to declare income or by illegally deducting expenses. The IRS gives taxpayers two years from the date of the first collection effort to petition for tax relief. For more information on irs tax settlement schemes, you can contact the tax professionals.
Know about important information for IRS Tax Settlement
Taxes, interest, and penalties can be collected for up to 10 years following the date of assessment, which is often soon after the date of filing. In order to settle a tax matter, accountants and attorneys will occasionally appeal to the applicable statute of limitations. Taxpayers who owe money to the Internal Revenue Service (IRS) still have time to submit collection appeals in an effort to stop tax levies, liens, and seizures before the statute of limitations expires.
Waiting for the statute of limitations to run its course is a potentially disastrous plan of action. If you don’t make your payment on time, the government will charge you even more money to cover the interest and penalties you owe them.
Hence, availing irs tax settlement services is the best option for taxpayers.
Conclusion
If you know you can’t pay your tax bill in full, no matter how many months you give yourself to do it, your best choice is either an Offer in Compromise or a Payment Plan Instalment Agreement. Consider an instalment arrangement if you have a few hundred dollars a month that might be used for your obligations. Applying for Currently Not Collectible status can help you avoid bankruptcy if your financial problems are temporary, but if your tax and other bills have grown out of control, bankruptcy may be your best alternative. Whatever your case might be, it’s best that you consult the professional tax expert through irs tax settlement services.