How We Help Tax Settlements
A Tax Settlement is an agreement between a taxpayer and IRS or State taxing authority to settle a tax debt for less than what is owed. It is a highly desirable resolution strategy because of the immediate savings effect it provides.
The IRS does not have a formal “Tax Settlement” program but rather they provide other resolution alternatives that could have the same reduced payment as a result. There are several Tax Settlement strategies used for IRS tax liability. We’ll go over the summary of each strategy below starting with the strategy that could result in immediate savings.
The most common resolution strategy for an IRS Tax Settlement is through the Offer in Compromise program. An Offer in Compromise allows you to settle with the IRS based on your inability to full pay, doubt that you owe the tax liability, or that requiring payment in full would create an economic hardship or would be unfair and inequitable because of exceptional circumstances. This resolution requires you to stay current and compliant with your tax payment and return filing requirements for 5 years after the offer is approved.
A Penalty Abatement may also yield savings by removing penalties from your total tax liability. Generally, penalties are abated when a taxpayer can establish reasonable cause for their failure to file or pay on time. The Penalty Abatement strategy is also final and the IRS can’t generally try to reassess the same penalties after the penalties are removed. The downside is the difficulty in getting a Penalty Abatement request approved by the IRS.
Another IRS Tax Settlement strategy is by setting up a Partial Pay Installment Agreement. If the monthly payment remains the same throughout the life of the tax liability, the Partial Pay Installment Agreement would end up saving you money because the tax liability would be written off when the Collection Statute expires. This strategy requires periodic financial statement review. The result of the mandatory financial statement review can result in a higher monthly payment amount which would turn this Installment Agreement into a full-pay agreement.
Currently Not Collectible is a temporary hardship status that does not require you to make payments on your tax liability. This strategy is generally based on a finding of economic hardship. The IRS can also place a tax liability in this status for closed and defunct businesses or if they are unable to locate a taxpayer. Currently Not Collectible status also requires periodic financial review that could result in the same drawback as a Partial Pay Installment Agreement, including requiring monthly payments if your financial situation has improved.
Having a successful Tax Settlement strategy will end up saving you money because you will not pay the tax liability in full. You will no longer have to worry about collection actions and can start over financially without the burden of tax debt. The key to keeping any of the Tax Settlement strategies in good standing is by keeping up to date with your current tax deposit, payment, and return filing requirements.
To settle your IRS tax debt, we have to analyze your financial situation and other factors of your tax liability such as Collection Statute Expiration Date, collection assignment status, and amount due. Omni’s licensed tax professionals are experts in providing you the best tax resolution strategies that could include a Tax Settlement strategy.
Do you know the Internal Revenue Code contains over 2.4 million words? Omni’s tax experts are well versed in the applicable regulations so you don’t have to wade through the tax code to resolve your tax debt. Call us now at (855) 529-3214 to start the process with a free and no-risk consultation.
Some states offer a Tax Settlement program or a variation of one. If you have outstanding state tax liability, contact us so one of our tax consultant experts can tell you whether your state has one and if you qualify for a Tax Settlement.
You can settle with the IRS by submitting an Offer in Compromise packet, Penalty Abatement request, or a proposal for Partial Pay Installment Agreement or Currently-Non-Collectible.
It’s always best to hire a licensed tax professional to help navigate the Tax Settlement options that may be applicable to you. Our decades of expertise in tax regulations and strategies simplifies the resolution process and leaves you time to do what you love both professionally and personally.