Many people who are so lagging behind on their federal tax payments often hire a tax attorney or CPA to help them sort out their problems with tax returns. Another approach involves working with a registered agent, who is a licensed professional to settle debts with the IRS.
One of the IRS tax settlement strategies available to people with unpaid taxes is to submit the so-called offer in compromise. This potential solution to pursuing tax returns could allow a person to pay off their IRS tax debt for less than the full amount owed. Depending on the circumstances, the IRS considers it a legitimate option for people who can prove that they are unable to pay their full tax liability or that it will cause them serious financial hardship.
The Internal Revenue Service website lists forms, application fees, and steps for submitting a compromise offer. A well-prepared filing that takes into account ability to pay, income, expenses, and asset equity has a good chance of being approved by the IRS. As stated on its Web site, “We usually agree to a compromise bid when the amount offered represents the most we can collect in a reasonable time frame.” One of the main eligibility hurdles is that applicants cannot be involved in open bankruptcy proceedings. Another potential stumbling block is the determination that the IRS counter-tax can be paid in installments.
While it is possible for an applicant to submit the required forms, a $150 application fee, and an initial 20% payment on their own, many people choose to get tax assistance from a tax relief attorney or other qualified tax advocate. Among the advice the IRS offers to people seeking tax resolution services is to make sure the advisor is qualified. According to the IRS, anyone who charges a fee to help prepare an offer in a compromise must have a current tax identification number (PTIN). It’s also important to know if a tax consultant can represent you before the IRS if the agency has questions. A tax professional must be a CPA, attorney, or registered agent to be allowed to fully represent you before the IRS in billing matters.
While business tax issues and having to pay back taxes can be stressful, fortunately there are tax debt reduction solutions and help with tax returns that can enable individuals and small companies to settle their debts to the government and get on with their lives.
