Tax Negotiation & Tax Settlement
What Is A Tax Settlement?
A tax settlement is an arrangement which is acceptable to the IRS or state taxing authorities and will allow a taxpayer to retire an outstanding tax debt for less than the original tax debt owed. Taxation authorities sometimes allow this type of tax settlement when extenuating circumstances exist that would prevent the taxpayer from paying off the full debt. While not every situation is appropriate for engaging in a tax settlement process, individuals who owe taxes often find that tax authorities are willing to explore the individual situation to determine if a tax settlement is possible. This is typically based on current tax regulations and the circumstances of the taxpayer.
THE IRS WANTS TO DO 2 THINGS: COLLECT MONEY AND CLOSE CASES. AT TAX SETTLEMENT ACCOMPLISHES THESE TWO GOALS.
Benefits of an IRS Settlement
There are several terrific benefits associated with attempting to negotiate a tax settlement.
- Pay Less Now – The most obvious is that the taxpayer ultimately pays a considerably lower amount of money to the tax authority. Assuming that the situation of the applicant meets certain qualifications, a tax settlement amount may be determined and presented within a very short period of time. Once the balance is paid based on a mutually agreement, the account is considered settled-in-full, meaning that the taxpayer is no longer subject to late fees and other types of penalties that would be incurred otherwise.
- Avoid Tax Liens and a Tax Garnishment – Another benefit of a tax settlement is that the taxpayer avoids the placement of tax liens on a home or business, a bank levy on one or more available accounts, or the implementation of a tax garnishment (Wage garnishment) on his or her paycheck.
How Does Tax Settlement Work?
The IRS will allow a taxpayer to either negotiate a tax settlement for less than the total amount owed or come to an agreement on another method for the IRS to collect taxes owed over time. For either of these situations the taxpayer must meet the qualifications of one of the tax settlement programs set forth by the IRS. The taxpayer will first have to determine which type of tax settlement they would like to apply for and then submit the appropriate forms to the IRS for review before making a decision. A taxpayer can either fill out the information themselves or they can have an experienced tax professional make the filing on their behalf.
Typically, the negotiation of the tax settlement remains between the individual and the IRS or tax authority involved, and may include a third party (Tax Attorney, C.P.A. or Enrolled Agent) if the taxpayer seeks professional tax settlement assistance. Firms that specialize in tax resolution can, surprisingly, also help to lower the costs to the individual, since there is typically a very positive outcome to seeking the assistance of a tax relief professional.
In many instances, a tax settlement calls for paying off the entire tax settlement amount within a specified period of time. During that time frame, no late taxes or tax interest is assessed on the balance of the tax settlement. Taxpayers may choose to pay off the settlement offer in one lump sum. If this is not possible, the IRS or tax authorities will set up an Installment Agreement that is within the means of the taxpayer, with the last payment coinciding with the final date attached to the tax settlement offer. Once a settlement has been reached by both parties, the taxpayer will be considered good standing with the IRS for the tax year/years that the settlement covered (unless the taxpayer defaults or doesn’t hold up to all the terms of the agreement).
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Who Is Eligible for Tax Settlement?
You do not need to be “destitute” to qualify for a tax settlement. The IRS offers settlements to taxpayers that are struggling with their tax debts after they pay what is called “allowable expenses.
I am Dave Rosa. It is both my pleasure and duty to provide you with a free and comprehensive evaluation of you tax debt problem. I am here to provide you with solutions. Our conversation will take 20 to 30 minutes to complete. It will be well worth your time.
The IRS allows the taxpayer to pay housing, car payment, up-keep of the car, health insurance, utilities and other allowable expenses. If you do not have enough to pay the tax debt after subtracting out these expense, you have a very good opportunity to settle with the IRS.
FIND OUT IF YOU QUALIFY TO SETTLE WITH THE IRS
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