Tax Blog

IRS Tax Settlement

by Kelly Hanley, Esq.

If you’ve ever found yourself at the less-fortunate end of an IRS dispute, you’ve probably muttered these four enchanting words: “IRS Tax Settlement, please.” Yes, it’s true – you can turn the foreboding specter of Uncle Sam into a benevolent fairy godmother. As a seasoned tax settlement attorney with two decades of experience navigating these stormy seas, I’m here to provide an informative life raft. Together, we’ll explore the labyrinth of tax relief programs, consequences, and the invaluable role of skilled lawyers. Buckle up and let’s dive right into the often-misunderstood world of IRS Tax Settlement

Understanding IRS Tax Liens

Before we delve into the great potential of an IRS tax settlement, let’s add a dash of drama by painting a vivid picture of the problem – IRS liens. If you’ve ever wondered what it’s like to have an omnipresent financial Big Brother, you’re in luck! An IRS lien is like a clingy octopus, with each arm wrapped firmly around your financial assets until you repay your back taxes. It’s not the kind of “hug” you want.

However, take heart, dear reader, because even octopuses have to let go eventually, and that’s where IRS debt relief programs enter our narrative. But remember, it’s always wise to call upon the aid of experienced tax attorneys before trying to disentangle the IRS’ tentacles alone.

Offer in Compromise (OIC)

From the gloomy depths of liens, we emerge into the sunlight of tax relief possibilities. Picture this: The IRS, that formidable fortress of financial fervor, offering to settle your tax debts for less than the total amount you owe. This may sound like a daydream, but it’s an actual thing called an Offer in Compromise (OIC).

An OIC is a deal cut straight from a tax attorney’s wildest dreams, a thrilling, if somewhat elusive, proposition. To qualify, you must convince the IRS that you either can’t pay the full debt, or doing so would create financial hardship – think Dickensian levels of austerity. However, it’s not all gloom and doom; every year, thousands of taxpayers successfully land an OIC. In 2019 alone, the IRS accepted 17,890 OICs out of 54,225 submitted. That’s about a 33% success rate, which sounds far more appetizing than octopus, right?

How to Settle Your IRS Debt

Settling your IRS tax debt is akin to taming a wild stallion: it requires finesse, strategy, and a knack for understanding the beast’s language. For this tricky task, you might want to enlist the help of skilled tax lawyers well-versed in the fine art of IRS negotiation.

Firstly, you’ll need to prepare a comprehensive financial disclosure and propose a payment plan, making sure your offer aligns with IRS guidelines. Beware, however, because if your offer smells fishy, the IRS might launch a detailed investigation into your finances – and no one likes having their proverbial laundry aired.

Next, patience becomes your watchword. While you’re anxiously awaiting a decision on your OIC, make sure you stay up-to-date with your current tax filings and payments. The IRS has a tendency to turn a side-eye on those who neglect their ongoing tax responsibilities.

IRS Debt Relief Programs 

If an OIC isn’t your cup of tax tea, worry not. There are other IRS debt relief programs to consider, such as an Installment Agreement, where you can pay off your debt in smaller, more manageable payments. There’s also the option of Currently Not Collectible status, a temporary pause in IRS collection activities for a taxpayer.

But remember, taking on the IRS alone is like dueling with a trained swordsman while you’re armed with a butter knife. Professional help can be a real game-changer in navigating the complex terrain of IRS tax settlement.

Consequences of Not Seeking Help

Ignoring tax debt is like ignoring a leaky roof. It might not cause problems immediately, but over time, it’s going to cause a deluge of issues. Not seeking help for your tax issues can result in penalties, additional debt, and a potential hit to your credit score. A bit like inviting a bull to a china shop – it’s not going to end well.

An experienced tax attorney can help you avoid these consequences and guide you on the path to financial freedom. Professional services such as tax attorneys or enrolled agents can be your sturdy umbrella in the tax debt storm, offering a shield of protection and strategies to maneuver through the complexities of IRS tax settlements.

The Call to Action

Whether you’re deep in the trenches of tax debt or on the brink of an IRS lien, remember that help is only a phone call away. You don’t have to navigate these murky waters alone. If you feel outmatched by the IRS, reach out to experienced tax lawyers who can provide expert advice and guidance on your journey toward an IRS tax settlement.

A debt-free future is not a far-off fantasy. It’s a realistic goal with the right help and a detailed map to navigate the treacherous waters of IRS tax settlement. Your golden key to freedom from debt is just around the corner – dare to reach out and grab it.

Call The Tax Defenders today for a FREE attorney consultation. 312-345-5440.

How much will the IRS usually settle for?

The million-dollar question—or perhaps it’s more appropriate to say, the ten-thousand-dollar question—is: “How much will the IRS usually settle for?” A bit like asking how long a piece of string is. The IRS, a bit like a tough but fair school principal, evaluates each case on its individual merits. 

However, let’s shed some light with a dash of data. The IRS has a program called the Offer in Compromise (OIC), wherein the IRS agrees to settle for less than the full debt amount. Sounds like a fairytale, right? But here’s the kicker: In 2019, the IRS accepted 17,890 OICs, with an average settlement amount of $10,234. That’s a fraction of the average tax debt of these taxpayers! So, while it’s not exactly a jackpot lottery win, it’s a pretty nifty reduction. Just remember, results vary, and a tax attorney can help guide you through this process.

Who qualifies for the IRS forgiveness program?

Ah, the IRS forgiveness program. Just the name sounds like a soothing balm for those burdened by back taxes. But who actually qualifies for this financial panacea? Let’s crack open this mystery like a tax-law piñata.

First, it’s crucial to note that IRS forgiveness program is often used to refer to programs like the Offer in Compromise (OIC) and Currently Not Collectible status when dealing with back taxes. To qualify, you typically need to demonstrate significant financial hardship—something that might make paying your tax debt as improbable as your pet iguana composing a sonnet.

But here’s the shocker—being broke isn’t enough. You need to submit a detailed financial disclosure showing that your income and assets are outweighed by your tax debt and living expenses, plus a fee. Also, you must be current with all tax return filings and payment requirements.

So, while it’s not quite a “forgive and forget” scenario, with expert guidance, you could well be on your way to financial redemption.

Does the IRS ever negotiate settlements?

Surprise! The IRS, which might seem as unyielding as a steel vault, does indeed negotiate settlements. I know, it’s like finding out your strict high school principal has a secret passion for ballroom dancing. 

Through the Offer in Compromise (OIC) program, the IRS shows its softer side by agreeing to settle for less than the full amount of tax debt owed. This isn’t some obscure loophole either; in 2019, the IRS accepted nearly 18,000 OICs. The is also the option for an Installment Agreement and a Streamlined Installment Agreement.

But before you break out the champagne, remember that negotiating with a government agency is a bit like playing chess with a grandmaster. You have to be prepared, strategic, and knowledgeable about the game’s rules. And this is where experienced tax attorneys come in, turning what might feel like a game of chance into a carefully calibrated strategy. With professional guidance, an IRS tax settlement isn’t just possible—it’s plausible. Be sure to talk with an experienced tax attorney so you can understand the application process.

How does the IRS tax settlement work?

Navigating the IRS tax settlement process is like embarking on an epic quest, complete with dragons (IRS officials) and magic keys (paperwork). Let’s don our armor and march forward!

To settle your tax debt, you’ll typically enter a program like the Offer in Compromise (OIC). Imagine this as a peace offering to the tax dragons. You’re saying, “Look, here’s what I can realistically pay. Let’s make a deal.”

But, be prepared for the dragons to look closely at your offering. They’ll scrutinize your income, expenses, asset equity, and future earning potential. If they believe you’re hiding a hoard of gold, they’ll dig deeper.

If your OIC is accepted—voila! You’ll need to adhere to the terms, including staying current with all future tax obligations for five years. Failing to do so is like poking the dragon—it’ll wake up, and your deal might be revoked. Therefore, having a tax attorney on your quest can help you avoid such pitfalls and reach a successful resolution.

What is a tax lien?

Ah, the tax lien! It sounds innocent enough, doesn’t it? Almost like a cute garden gnome. But let me assure you, it’s as cute as a crocodile in your bathtub. 

A tax lien is essentially the government’s legal claim against your property when you neglect or fail to pay a tax debt. It’s like Uncle Sam knocking on your door saying, “You owe me money. Until you pay up, I have a right to your stuff.” 

This “stuff” can include your home, your car, and even your financial assets. When a lien is imposed, it’s public record, potentially harming your credit score. It’s like having a huge, flashing neon sign above your house that says, “I owe the IRS.” Not exactly the kind of attention you want. 

That’s why resolving tax debt proactively is crucial. With professional help, you can negotiate settlements, and keep those pesky crocodiles at bay and away from your credit.