A tax settlement is a broad term describing the process of a taxpayer and the IRS coming into agreement to settle a tax liability through one of the IRS programs.
There are several options the IRS has to resolve tax liabilities. The main consideration the IRS takes into account is the taxpayer’s financial ability to pay the tax debt back. This would include the taxpayer’s income and expenses, assets and any extenuating circumstances.
Basically tax settlements are in 2 general categories. One is where a taxpayer cannot pay the tax liability back in full and may qualify to pay back less than the tax debt owed. This would include the following:
Offer in Compromise
An Offer in Compromise is a tax settlement where the IRS agrees to take a specified amount of money as a onetime offer to settle the taxpayer’s tax debt. An Offer in Compromise can be submitted on the basis of Doubt to Collectability, Doubt to liability and Effective Administration (hardship case). The IRS has stringent guidelines and typically will require financial disclosure of income/expenses and assets.
Partial Payment Plan
A partial payment plan is where the tax payer enters an agreement with the IRS to pay back less than the amount owed over a specified period of time.
Penalty Abatement
Penalty abatement allows the taxpayer to abate part or all of the penalties. Typically, it will not eliminate interest and it will not reduce the principle of the tax liability that is owed.
If a taxpayer does not qualify for a tax settlement that is less than the amount owed there are two other options:
Installment Agreement
An installment agreement is an agreement with the IRS and taxpayer to pay the tax liability over a specified period of time. The interest will continue to accrue while the installment is in place. An installment agreement can be a streamline if the taxpayer qualifies, if not the installment agreement will be based on the financial ability of the taxpayer to pay the tax debt back and the amount of the tax liability owed.
Uncollectible Status
“Uncollectible” refers to the IRS placing the taxpayers account in a temporary hardship. Typically it is due to the taxpayer becoming unemployed or some other temporary financial hardship where the taxpayer cannot pay the tax liability back in an installment at this time. The IRS will suspend collections until the taxpayer’s financial situation changes. This does not reduce the tax liability nor stop interest from accruing.
Before considering a tax settlement you must be compliant with all tax filings.
For over 20 years, CKTax we has successfully represented thousands of tax payers and businesses in obtaining tax settlement with the IRS.
For a free consultation, where we will thoroughly discuss your unique tax situation and the best possible tax resolution, please call 888-894-2005 or fill out the Free Evaluation form below.
There are hundreds of companies representing themselves as “Tax Settlement”, “Tax Relief”, “Tax Resolution” and “ Settle Tax Debt Specialists” many who are taking advantage of the millions of American taxpayers who owe the IRS taxes and are in distress. There are very few of them who are actually licensed, have the expertise and experience to help taxpayers in resolving their debts with the IRS.
The following 10 tips should help you in deciding on a company to represent you and avoid a scam.
“We got behind on our taxes and ended up owing the IRS over $20,000. We felt the financial pressure of having this debt and didn’t see any way we would be able to pay them in a timely manner. We consulted with CKTax and found we qualified for an Offer In Compromise. They took care of everything. We never had to talk with the IRS once. The IRS settled our debt of over $20,000 for $500!!”
“I found CKTax online. Cynthia counseled me in what to do, how to do it, and worked with the IRS to put holds on the penalties and interest. She negotiated me time to gather my reporting data so the IRS could not use liens or other measures. I was pleasantly surprised with the level of service and the attentiveness to my needs. My delinquent tax returns were completed quickly and very efficiently.”
“I am extremely pleased with the service and professionalism from CKTax. They helped me negotiate a $30,000 tax debt from three years of back taxes to a reasonable amount of $4,000. She dealt with the pushy IRS agents, so I didn’t have to lose my peace of mind knowing she had it under control. She was polite and answered all the questions I had about what was going on.”
