Nowadays, several options have been observed for taxpayers to resolve IRS tax debt. Such taxpayers can request a monthly payment plan either by seeking bankruptcy protection or submitting a compromise offer. In this blog, we will discuss different IRS tax settlement options about an Internal Revenue Service (IRS).
Options to Deal With Tax Debts
Taxpayers can have the following 5 dealing options for the settlement of IRS tax debt.
- Filing Bankruptcy
- Setting up a complete installment agreement
- Setting up a partial installment payment agreement
- No collectible availability
- Submitting an offer in compromise IRS
Factors Determining Potential Offer In Compromise
The factor determining the success of a taxpayer’s offer in compromise is their ability for borrowing and paying. Your offer in compromise will not get approved if it is not in compliance with taxation laws. For instance, taxpayers should pay heed to estimated income tax, payroll deposits, and tax returns. This capability of borrowing and paying is measured by the collection potential.
Which Debt Strategy is Perfect For Clients?
After preparing financial statements and concerning debt strategies, it can be determined which tax debt settlement is suitable for clients depending upon the financial situation. For this purpose, we evaluate your ability to play. An offer in a compromise program is perfect for you if you cannot pay a full tax debt.
In most cases, monthly income is examined for installment agreement. If the client’s income is enough to fulfill all expenses, an offer in compromise IRS is offered. While if client expenses are greater than the IRS limit, we will recommend a bankruptcy option.
Which IRS Tax Debt Strategy is Best?
What is a Partial Payment Installment Agreement?
Partial Payment Installment Agreement deals with the taxpayer having a monthly payment. This agreement is easier than an offer in compromise because it can be re-evaluated after every two years by the IRS.
In this, the client ends up paying a lesser amount than that of the owner. For instance, if the IRS thinks the taxpayer can pay more but he is not. He can request reevaluation to pay less.
How to Request a Partial Payment Installment Agreement?
According to Bauman, taxpayers can request a partial payment installment agreement in a written application to IRS officers who deal with the collection system of the account handling unit. This written request is to be submitted to the service center for IRS tax debt partial settlement.
Furthermore, he stated that taxpayers need to submit full documentation in support of Forms 433A/ 433B to demonstrate paying ability of taxpayers.
What Should Taxpayers Do Having No or Little Documentation?
As the IRS tax debt expects complete documentation for collection, backup documentation is provided. If you don’t have any bank statements, you can get acceptance of claimed expenses. However, payroll tax debt relief can be accepted by the written projections about client income with little documentation.
Can You Settle Payroll Taxes and Penalties?
Yes, business owners can settle their payroll taxes with penalties via an offer in compromise as stated by Bauman. If neither your business nor business owner is in the potential to pay full IRS tax debt, an offer in compromise is accepted.
Is There Any Disadvantage of Filing Offer In Compromise?
Yes, the major disadvantage of filing an offer in compromise is a delay in the limitations of the 10-year statute collection of IRS tax debt. It depicts that the IRA has a 10-year duration for collection of IRS tax debt. However, you can get an extension in the duration of this time by seeking tax settlement help.
Is It Possible To Request Offer In Compromise On Basis of Collectability or Liability?
Yes, it is possible but it can be done when a taxpayer proves himself in suffering from extraordinary hardships. Bauman is witness to one such case in which the taxpayer was suffering from serious medical illness and health experts were not sure about his life. And in that case, an offer in compromise was accepted on the doubt basis of collectibility or liability.
Why Choose MyTaxSettlement?
My Tax Settlement is a reliable option for the settlement of IRS tax debt because of our vast experience in collection dealings. After observing your financial statement, we will suggest to you the best strategy to settle payroll tax debt. Moreover, My Tax Settlement is highly professional in evaluating tax potential and relevant options. Feel free to consult us for a better tax settlement.