How to settle your tax debt with the IRS by yourself
Paying your taxes is not optional; it is mandatory. When individuals fail to pay their taxes, they attract penalties and interests which simply means that they will still have to pay the debts but now at a higher price.
If for some reason, you are unable to pay your taxes early, you should begin to consider the options available to you. There are a few ways to settle your tax debt by yourself such as:
- Getting an offer in compromise (Settling the debt by paying less than you owe)
- Considering your payment plan options.
The Offer in Compromise otherwise known as the IRS settlement is one of the most talked-about things in the world when it comes to the topic of IRS taxes and debts.
You may have seen advertisements on your TV, radio, and the internet portraying the IRS offer in compromise as a miracle solution that allows you to settle your tax debts for pennies on the dollar, but is that really the way an offer in compromise works? In the next paragraphs, we will be explaining the concept of an offer in compromise to you and how it really works.
First and foremost, you should know that there are three different types of offers in compromise that you can negotiate with the IRS. They are:
- An offer based on doubt of liability: Here, you’re simply saying that there are some serious doubts as to whether you even owe the tax in the first place.
- An offer based on effective tax administration: This is the least common of all three.
- An offer based on doubt as regards collectibility: This is the most common of the three. It is the most frequently submitted and most accepted by the IRS. When you submit an offer based on doubt as to collectibility, you are simply saying that you agree that you owe the tax, however, you can not afford to pay the tax in full before the tax becomes uncollectible. Therefore, it is in the best interest of the government to accept the lesser amount that you’re offering to satisfy the tax debt in full.
If you wish to really understand the offer in compromise, you must first understand these two concepts:
- Reasonable collection potential (RCP): This is the amount the IRS couldn’t normally expect to collect before the tax debt expires notwithstanding any offers to compromise the liability. In other words, it’s the amount of money that the IRS could expect to get from you if they just garnish your wages.
- Collection Status Expiration Date (CSED): This is the amount of time that the IRS has to collect that debt before it expires, which is typically 10 years from the day that the tax was assessed.
Keeping the RCP and the CSED in mind, we must assess two things. The first thing is how much the taxpayer actually owes (that is, the size of the debt), and the second is when the CSED date is due, in other words, when does this tax debt expire. Equipping yourself with the proper knowledge of these concepts will help you better negotiate a tax debt settlement with the IRS.
An offer in compromise is a great way to settle your debts if you currently have overwhelming tax debts. We can help you through the process of getting your offer accepted if you contact us today. We can help you find out if your qualify for an offer in compromise and what payment plans are available to you.
About us
We are a tax relief firm dedicated to giving you the best results regarding resolving your tax debts. Our team of qualified professionals is available round the clock to provide you with the assistance you need. Contact us now at 888-585-8629 or 617-430-4674 or send us an email at help@newstarttaxconsulting.com.
For more information, email info@newstarttaxconsulting.com
