Taxpayers who owe taxes to the Internal Revenue Service (IRS) may be wondering if they can settle their tax debt for less than what they owe. The good news is, yes, you can settle with the IRS through an offer in compromise (OIC) program. The OIC is a program that allows taxpayer to settle their tax debt for less than the full amount owed. In this blog post, we will delve into what you need to know about settle with irs.

1. Eligibility for Settling with IRS

If you owe taxes to the IRS, you may be eligible for an OIC if you can prove that there is no possible way for you to pay the full amount of your tax debt. Hence, the IRS will review your financial standing before accepting your offer. To qualify, you should have filed all your tax returns and have made the necessary payments for the current year. If you have failed to file returns or have not made the payments required, the IRS will not consider your offer.

2. Types of Offers in Compromise

There are three types of OIC: (1) doubt as to liability, (2) doubt as to collectability, and (3) effective tax administration. The first type applies when there is a dispute as to whether you actually owe the tax debt. The second type applies when you owe the tax debt, but there is doubt regarding the IRS’s ability to collect the full amount. The third type applies when paying the full amount of tax debt will result in financial hardship.

3. Payment for the Offer in Compromise

You are required to pay an application fee of $186 when you submit your OIC. The amount of payment for the OIC will depend on the type of OIC you have chosen and the terms of the agreement with the IRS. The IRS accepts installment payments for the OIC, but you will still be required to make a payment for the agreed amount upon acceptance of the offer.

4. Benefits of an Offer in Compromise

Through the OIC, you can settle your tax debt for less than the full amount, and you can make payments over a longer period of time. As a result, you can avoid a levy on your bank account, a lien to be imposed on your property, or having the IRS garnish your wages. Further, once the OIC is accepted and paid, the taxpayer owes no further taxes with respect to the year( s ) covered by the OIC.

5. The Importance of Hiring a Tax Professional

The process of settling with the IRS can be tricky and complicated. The help of a tax professional may be needed to ensure that the application and provisions of the OIC are correct. A tax professional can also help you evaluate your eligibility for an OIC and provide guidance on other options available for you.

Conclusion:

Unpaid taxes can create significant financial difficulties for taxpayers and their families. Settling with the IRS is a viable option for taxpayers who cannot pay their full tax debt. The OIC allows taxpayers to settle their tax debt for less than the full amount owed and can offer a chance for a fresh start. It is important to remember that settling with the IRS is a complicated process, and consulting a tax professional is highly recommended.