It never feels good to owe money to someone, but it feels especially stressful when the debtor is the Internal Revenue Service (IRS). While most people earnestly want to settle their debt, there is sometimes a fear of approaching the situation due to a lack of financial resources. However, this worry should never hold you back. It does not matter your financial situation as there is generally a way to resolve your tax debt for a reduced amount.
Reduced Payment Installment
You have probably heard of an installment agreement. A reduced payment installment agreement is very similar to these arrangements, but instead of making a payment on the original balance, you make payments based on a reduced portion.
Before you can enter into one of these agreements, you will need to get the IRS to accept your reduced debt offer and your payment installment amount. It is important to note that the likelihood of having your reduced agreement accepted is largely based on the dollar amount of payments you can make.
Offer in Compromise
One of the fastest ways to settle your tax debt for an amount that is lower than you originally owed is an offer in compromise. Essentially, an offer in compromise is a request you make to the IRS to settle your tax debt for a significantly lower amount than you owed, with the agreement that you will make a one-time payment for this amount, most often, immediately after the compromise has been accepted.
Additionally, similar to a reduced payment agreement, the more prepared you are to make an immediate payment for the offered amount, the greater the chance of the IRS accepting your offer.
Time Limitations
When it comes to tax debt with the IRS, it does not get any more serious. While the IRS has far-reaching power and options for involuntarily gaining repayment—their power is not limitless. In fact, the IRS can only collect on taxes for a period of 10-years. Once this clock expires, you are not required to pay the debt.
Keep in mind that different factors determine exactly when this clock starts, so it is best to get clarification from a skilled professional. For example, it could be the filing date or the date from the initial processing of the return.
It is important to understand that not every scenario will be available to each person. To learn more about what your options are, contact a tax debt relief company.
