How to Pay the Lowest IRS Tax Debt Settlement

 

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I wanted to offer you some more information about offers in compromise. An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It’s a good option if you can’t pay your full tax liability, or if doing so will create a financial hardship.

The IRS considers each person’s situation on a case-by-case basis. There are guidelines to follow for income, expenses allowed, assets owned, and finally, if they feel you have the ability to pay. The IRS will generally approve an offer in compromise if they feel the offered amount represents the most they can collect within a reasonable amount of time.

This program isn’t for everyone. If you don’t qualify, you should consider an installment agreement.

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The IRS considered each person’s
situation on a case-by-case basis

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Forms that must be submitted include a Form 433 disclosing all income, expenses, assets and debts. This is a key document. Form 656 must also must also be filed requesting and justifying your offer; this will include taxes due and years covered, your reason for the offer, low income certification, payment terms, the amount of down payment and deposition of the offer, your source of funds for that down payment and continuing payments, and finally, your offer terms. Lastly, there is a filing fee required of $186 that must accompany the offer in compromise.

You have payment options that include lump sum cash, which is paid over five or fewer months. A required 20% non-refundable deposit is paid at application time while your offer is being considered. Your other option is periodic payment, which is paid in six or more monthly payments, and in full under 24 months after your offer is accepted by the IRS. It can usually take up to a year to get an offer accepted. If the IRS does not make a determination on your offer within two years, your offer is automatically accepted. 

These are just some small details for an Offer in Compromise with the IRS. It takes a great deal of time and documentation. To get your least amount to pay to the IRS, you should hire a qualified tax problem specialist. Please feel free to reach out to me for help or for answers to any questions you have.

What Is Innocent Spouse Relief?

Most married couples file joint returns because of the many advantages in filing a joint return. However, one of the disadvantages is that both people are liable for the income taxes. Failure to pay income taxes means both people are responsible. 

If there’s a divorce, even if a court decree indicates that one person must pay the taxes, the IRS doesn’t care. They want to see the money no matter what. If one person earns most of the money or causes the problem, the IRS will still look to both of them for payment.

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The IRS just wants the money.

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If one (current or former) spouse feels they have no control over the situation, they may be able to be removed from responsibility. This is called innocent spouse relief.  

There are three types of innocent spouse relief: innocent spouse relief, separation of liability relief, and equitable relief. Each area has its own specific requirements. 

If you have any questions about this topic or more, just give me a call or send me an email. I would be happy to help you!

What to Do When You Get Hit with a Tax Penalty

Accidents happen. You might forget to file on time because you’re dealing with a life-changing event or some kind of disaster. Maybe you started a business but didn’t have a professional to pay the build taxes on time, or you didn’t have the money to pay the income taxes and didn’t get an extension. 

These are all causes for a tax penalty. When you get that penalty bill, it can be up to 25% of what’s owed. That’s huge! What are you going to do?

Don’t panic. The IRS has a one-time penalty abatement program. They won’t offer this to you. You have to apply for it. You get one penalty abatement every few years. If you have a lot of tax problems, make sure you get the most expensive one abated and leave the others intact.

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The IRS has a penalty abatement program.

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If you have a penalty you want to see if you can get removed, call the IRS and explain your situation. Sometimes begging for forgiveness works. Just be prepared to be on hold for up to an hour when you call them. They are woefully understaffed. 

If you cannot get the penalty removed, give us a call or send us an email and we’ll see what we can do. Please don’t hesitate to give us a call with any questions or concerns. We would be happy to help you!