There is no definitive answer to this question as the IRS will settle for different percentages depending on the individual’s case and the circumstances involved. However, it is generally accepted that the IRS will settle for an amount that is less than the full amount owed if the taxpayer can demonstrate that they cannot pay the full amount.
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Can I Settle With The IRS?
Though it is possible to settle with the IRS for a lower amount than what you owe, it’s difficult to accomplish. The IRS will only agree to negotiate if you can show evidence that demonstrates an inability to pay the full balance. The most compelling way to do this is documentation of your income, expenses, and assets.
The IRS can write off some or all of your tax debt and settle with you for an amount that’s less than what you owe. This is called an offer in compromise. If you’re considering this option, it’s important to seek professional help to ensure that you meet all the requirements and have a strong case. Otherwise, you could end up owing even more money.
What Is An Offer In Compromise?
An agreement in which a taxpayer agrees to pay the IRS less than what is actually owed for taxes. The offer in the compromise program is an opportunity for taxpayers struggling to pay their full tax liability to do so over an extended period of time.
The Offer in Compromise, which allows for debt reduction through the Fresh Start Initiative Program, may be the best option available, though there are strict qualifications for this program. The OIC is a payment plan for people who owe money to the IRS and are struggling to pay it back. The process is very detailed and not everyone who owes money will qualify.
You’re much more likely to get an Offer in Compromise if you have a qualified tax relief company on your side. Tax experts know the IRS Fresh Start Initiative Program qualifications inside and out, so the IRS won’t be able to coerce or deceive them into an unfavorable resolution.
To make sure you only work with legitimate tax relief companies, please consult our ‘How to Avoid Tax Relief Scams’ section. Fraud companies will promise you an OIC without first assessing your tax circumstances and completing the necessary forms for the IRS. The Internal Revenue Service is the only organization with the power to confirm an Offer in Compromise.
A reputable tax relief company will be upfront about their methods, have a track record of successful dealings with the IRS, and tailor their approach to fit your individual financial situation.
How Can I Apply For An Offer In Compromise?
The tax debt you owe can be lowered and paid off through an offer in compromise. If you’re unable to pay the entire amount or doing so would cause hardship, this might be a workable option for you. Several factors–such as your unique set of circumstances–come into play when we make a decision.
- Ability to pay
- Equity in assets
An offer in compromise is only approved when the amount of money represents what we could reasonably expect to collect within a certain period. Before you submit an offer in compromise, be sure to explore all other payment options first. This program might not work for everyone and if you choose to hire a tax professional to help with filing, make sure they are qualified before signing anything.
How Do I Know If I Qualify For An Offer In Compromise?
To qualify for an Offer in Compromise, taxpayers must:
- File all required tax returns. This includes filing any back taxes that may be owed.
- Be current on all tax payments. This implies that taxpayers must have paid all the estimated taxes that were required for the current year, as well as any taxes that were required for the previous year.
- In addition, if you have any unpaid taxes from the previous year, you should also make arrangements to pay those. The sooner you pay them, the better you’ll avoid accruing interest and penalties. You can usually set up a payment plan with the IRS if you can’t pay the full amount at once.
The IRS is unlikely to accept an OIC (offer in compromise) unless the amount offered by the taxpayer is greater than or equal to the taxpayer’s reasonable collection potential. The RCP calculates the taxpayer’s ability to pay and takes into account the value that could be gained from selling the taxpayer’s assets (like real estate, cars, bank accounts, and other property) as well as the taxpayer’s expected future income, minus certain amounts allowed for basic living expenses.
What Are The Payment Options?
You have several options if you cannot pay your taxes.
In order to be considered for the offer, you must submit an initial payment of 20% of the total amount. If your proposal is accepted, you will receive written confirmation. The remaining balance must be paid in five installments or fewer.
Include your down payment with your application. You will then pay the balance monthly in installments until the IRS decides on your offer. If the IRS approves your offer, you will need to continue making monthly payments until the balance is paid off.
To Sum Up:
The IRS will set up a payment plan for you depending on what you owe and your capacity to pay when they offer you a loan. You have to continue making monthly payments until the entire balance is paid off, which is something crucial to remember since it can assist you in budgeting your finances and making certain that you don’t default on your loan.
Depending on your individual circumstances, the IRS usually settles for 10-20% of what you owe. Remember that if you take out a loan to pay this off, you’ll still need to make monthly payments until the amount is paid in full. Keep this in mind as you budget so that you don’t default on your loan.