Tax Settlement

What Is An IRS Tax Settlement?

A tax settlement is when a taxpayer settles their tax liabilities through the IRS Offer in Compromise program. The IRS offers a tax settlement to taxpayers that are financially struggling with their tax debts or have valid reasons to abate their penalties. The IRS offers several different settlement options for taxpayers to settle their taxes owed. The main factor the IRS takes into consideration when determining if the taxpayer will qualify for a tax settlement is their financial situation. The tax settlement that a taxpayer qualifies for is dependent upon their unique financial situation. The IRS prefers individuals to pay their taxes owed in full, but the IRS will allow a settlement when a taxpayer proves that payment of their tax debt is not going to happen.

Tax Debt Relief - Tax Settlement

Every day of the week, there are twenty (20) million taxpayers suffering from the overwhelming burden and stress of IRS tax debt. Recent changes in the tax laws the IRS has made it easier for financially struggling taxpayers to obtain Tax Debt Relief. The new changes for IRS Tax Debt Relief is called the "Fresh Start Initiative".

How a Tax Settlement With The IRS Works

The IRS will allow a taxpayer to negotiate a tax settlement for less than the total amount owed. The taxpayer must meet the qualifications of one of the tax settlement programs set forth by the IRS. The taxpayer will first have to determine which type of tax settlement they would like to apply for and then submit the appropriate forms to the IRS for review before making a decision. A taxpayer can either fill out the tax settlement information themselves or they can have a tax lawyer make the filing on their behalf. Once a settlement has been reached by both parties, the taxpayer will be considered good standing with the IRS for the tax year/years that the tax settlement covered (unless the taxpayer defaults or doesn’t hold up to all the terms of the agreement).

How to Settle Taxes Owed

In order to make a tax settlement agreement over your taxes, you first need to make sure you are in full compliance with your tax filings and be sure to file any unfiled tax returns. If you did not file and the IRS has filed a Substitute of Return (SFR) in lieu of your tax return, it is highly suggested you use a tax professional to file an amended return to decrease the amount of taxes owed (this is because the IRS does not give the taxpayer the benefit of the doubt on anything when they file for an individual and it is highly likely that they owe far less). Once you have filed and know how much you owe, you can review the tax settlement options and see what tax settlement method you will qualify for (if any at all). Tax settlement options are listed below.


An Offer in Compromise

An offer in compromise is the ultimate tax settlement method individuals think about when it comes to settling with the IRS. Not only is this the most thought of tax setlement method, but also the hardest one to qualify for. With an offer in compromise you will be required to make a tax settlement offer to the IRS in an amount that you can afford to pay (you can pay your tax settlement in payments) and the IRS must be willing to accept your tax settlement in order to wipe the remaining liability clean. When making the tax settlement offer you will have to convince the IRS that the amount you offer them is equal to or greater than the amount that they would be able to collect from you through forced collections without forcing you into financial hardship.

Currently not Collectible Status / Financial Hardship

This form of agreement puts the taxpayer off the hook temporarily until their financial situation has improved enough for the IRS to begin taking collection actions against them again. Although being declared Currently not Collectible is not a tax settlement, you will not pay the IRS anything and the Statute of Limitations will continue to run out your tax debt.

Important Tax Settlement Notes

An important thing to know about the IRS is that they will continue to enforce collections on individuals even if they cannot pay. Even if these collections cause extreme financial hardship on the taxpayer the IRS will not stop until the taxpayer proves to the IRS that they cannot pay. The IRS is very complex and it is advised to use a tax lawyer when attempting to make a tax settlement with the IRS.




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Flat Fee Tax Service

3200 4th Ave., Suite 208,

San Diego, CA 92103

Phone. 800-589-3078