Tax settlement and negotiation programs exist to help those taxpayers that are financially struggling and cannot pay their taxes in full.
All taxpayers that owe taxes can come to some form of tax settlement with the IRS or State, whether it be settling taxes for less or coming to an agreement on how to pay back the taxes owed. Don’t believe tax companies that promise they can settle taxes for less without knowing your detailed financial situation. If it sounds too good to be true, it likely is.
How Our Tax Settlement Service Works
Tax settlement and negotiation services exist to help those taxpayers that are financially struggling and cannot pay their taxes in full.
We strive to find the best tax settlement service option for our clients after we review their tax transcripts and their financial situation. The IRS and State taxing authorities do have strict guidelines as to who will qualify for these programs and we will determine which one fits your situation the best. Below is a basic outline of how our tax settlement process works in order to get you the best tax deal.
How To Stop It
Step 1: Consider Possible Reduction of Assessed Taxes
Before we begin on a final resolution our tax team will analyze your tax records to see if your tax amount can be reduced. It is common for our clients to receive IRS and state taxation letters with tax balances due that are erroneous. In some cases, the taxing authorities will file a substitute for return (SFR) for you. SFR’s generally minimize tax deductions and omit tax credits resulting in a much higher tax bill. Other situations arise, out of control of the taxpayer, which leads to noncompliance with tax laws. Fortunately, in many cases, taxing authorities will waive the penalties that were assessed. Below are some of the services we offer for the initial reduction of taxes owed.
- Amending Tax Returns: If there were errors on your past returns, missed credits and/or deductions, or the tax authorities filed a substitute return for you, we can file an amended tax return for the particular year or years. If the IRS or State accepts the return, this can reduce the overall tax bill. This will also reduce the amount of penalties and interest accrued as well.
- Penalty Abatement: If you have a “good enough” reason for not staying in compliance with tax laws, then there is a good chance that penalties may be removed or reduced. Penalties can add a significant amount to a tax bill that is overdue and penalty abatement may significantly reduce that balance.
Step 2: Consider a Final Resolution Method
When we have arrived at a final tax balance owed, we will begin analyzing your financial and tax situation. Depending upon your monthly expenses, the tax amount owed and other financial considerations, we will determine the best resolution method to get back into full compliance with tax laws. Below are some of the resolution methods we will consider for your case.
- Offer in Compromise: This is a program offered by the IRS and some states to help struggling taxpayers that have a small chance of ever paying off their taxes owed without enduring significant financial hardship. With this program, the IRS or State will accept a smaller amount than the total amount of taxes owed in a lump sum or over a few payments.
- Innocent Spouse Relief: This isn’t necessarily a settlement, but it does wipe the tax liability clear of one individual and pass it to another. When married couples file a joint tax return they are both equally liable for any taxes that are owed. The IRS and some states realize that it isn’t always fair to hold one party liable for the tax liability. If this is the case for you, the liability may be shifted 100% or mostly to the other spouse or ex-spouse.
- Partial Payment Installment Agreement: This program allows individuals to make smaller monthly payments than are required with a regular installment agreement (mentioned below). This option is for the struggling taxpayers that would endure financial hardship if they were required to pay the full amount required under a normal payment plan. Typically, with this type of agreement an individual ends up paying less than the total amount of taxes due because the statute of limitations on the debt expires before it is paid off in full.
- Currently not Collectible: This option puts a hold on tax collection activities. If a taxpayer does not have enough funds to make payments towards the debt the taxing authorities will wait until their financial situation improves before collecting. At times, the statute of limitations on the debt expires before the taxes are paid and the tax debt is forgiven.
- Installment Agreement: If you can afford a manageable monthly payment, we can enter you into an installment agreement with the IRS and/or the State to pay back the taxes owed. Once entered into this type of agreement you are considered to be in compliance with your taxes and it stops penalties from being assessed (interest still applies).
Our tax professionals will work to get you the best possible outcome by reducing your taxes owed (if possible) and then determining the best resolution method to use. We specialize in dealing with complex tax problems and use some of the best financial and tax modeling software available to help determine the best way to resolve your tax problem.