Friday, October 17, 2008

IRS - Effective Tax Resolution

“I have an IRS tax debt and I don’t know what to do. What are my options?” As a tax consultant this is a question I am asked frequently. In consulting with clients I have determined clients are not aware of the many options available to them thru the Internal Revenue Service tax code. The options can be broken down into three primary categories. First, the taxpayer may qualify for an Offer-In-Compromise. This is the highly touted “pennies on the dollar” settlement. The truth of the matter is very few of these are ever accepted by the IRS, but this is a viable option.

The second category is Currently Not Collectible. This applies to a taxpayer who demonstrates they literally do not have the ability to repay their tax debt they owe the IRS. If accepted into this category the taxpayer is not obligated to pay the IRS monthly payments, nor does the IRS attempt to collect on the taxpayer. The IRS will review the taxpayer’s ability to pay from time to time however and may attempt to collect at some point in the future if the taxpayer experiences a substantial increase in income.

The third category is some type of negotiated Installment Agreement. This is where a taxpayer does not qualify for either an Offer-In-Compromise or Currently Not Collectible and some type of monthly payment arrangement is made. It is usually a good idea to have a professional tax resolution company conduct a thorough analysis of your situation to determine the best alternative you qualify for.

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