If you have ever attempted to contact the IRS by phone, you are likely familiar with the seemingly interminable wait times and multiple transfers that frequently result in frustration. Imagine attempting to negotiate your tax debt under these circumstances without a comprehensive understanding of your options.
The resolution of your tax issues can be made even more difficult by the fact that the process can feel like an uphill battle. That is why it is crucial to be well-informed about the various methods by which you can negotiate with the IRS.
This article will deconstruct the most prevalent methods for resolving tax debts and provide advice on how to more effectively navigate this intricate process with the aid of the appropriate professionals.
IRS Negotiation Options
- Installment Agreements
An installment agreement enables you to pay your tax debt in monthly installments that are more manageable than a single total sum. If you are unable to pay your tax bill in full but are able to make monthly payments, this option is appropriate.
- How It Works: You suggest a monthly payment amount that is within your budget, and the IRS will evaluate your financial situation to ascertain whether it is acceptable. Upon approval, you will be required to enter into a formal agreement and make monthly payments until your debt is entirely paid off.
- Pros: This alternative prevents the IRS from enforcing collection actions, including garnishing wages and levying bank accounts.
- Cons: The total amount you owe may increase over time as interest and penalties continue to accumulate on the outstanding balance.
- Offer in Compromise (OIC)
An Offer in Compromise is a formal agreement between the IRS and you that enables you to resolve your tax debt for a smaller amount than the full amount owed. It is intended for individuals who are unable to pay their debt in full and can provide evidence of experiencing financial hardship.
- How It Works: You submit a proposal to the IRS that outlines the amount you are able to afford to pay and the reasons you believe it should be accepted as a final settlement. The IRS will subsequently evaluate the reasonableness of your offer by examining your financial situation and documentation.
- Pros: The debt will be resolved, and you will be required to pay a lower amount if the offer is accepted. This alternative has the potential to substantially decrease your tax obligation..
- Cons: The process can be complex and protracted, and not all proposals are accepted – in fact, the Offer in Compromise program is very difficult to qualify for. Furthermore, there is a substantial non-refundable application fee and stringent eligibility requirements.
- Currently Not Collectible (CNC) Status
If you are facing severe financial difficulties and are unable to make any payments toward your tax debt, you may be eligible for Currently Not Collectible status. IRS collection actions are temporarily suspended under this status.
- How It Works: You have to furnish the IRS with documentation that demonstrates that you are unable to pay your debt as a result of financial difficulties. The IRS will evaluate your circumstances and may designate your account as CNC status, which precludes the pursuit of collection actions against you while you are unable to pay.
- Pros: This alternative offers temporary relief from IRS collection actions, including wage garnishments and bank levies.
- Cons: Interest and penalties will continue to accumulate, and the IRS may closely monitor your financial circumstances to ascertain whether your status should be maintained or altered.
- Penalty Abatement
If you have been assessed penalties for late payments or failure to file, you may be eligible to request a penalty abatement. This implies that you have the option to request that the IRS reduce or eliminate your penalties in accordance with reasonable cause.
- How It Works: You must show the IRS that your inability to pay or file on time was the result of circumstances beyond your control, such as a severe illness or natural disaster. The penalties may be reduced or eliminated if the IRS determines that your justifications are legitimate.
- Pros: Your overall tax liability can be reduced or eliminated by reducing or eliminating penalties.
- Cons: The original tax debt and any accrued interest will remain your responsibility.
Tips for Successfully Negotiating with the IRS
- Gather Your Financial Information: Make certain that you have a comprehensive understanding of your financial situation, including documentation to support your income, expenses, and all of your assets, prior to engaging in negotiations with the IRS. Presenting a realistic proposal will be facilitated by this..
- Be Honest and Accurate: To prevent complications, ensure that the IRS receives precise information. Delays, rejections, or even additional penalties may result from misrepresenting oneself or the facts.
- Consider Professional Help: COTTS LAW – A Tax Resolution Law Firm’s tax relief professionals are a valuable resource and can help you negotiate with the IRS. They have a wealth of experience in managing tax debt and can assist you in navigating the intricate process.
- Stay in Communication: Maintaining your payment schedule and communicating with the IRS in the event of any complications is crucial if you have engaged into an agreement. Only by maintaining a positive relationship with the IRS can additional complications be averted.
- Review Your Options Regularly: It is essential to remain informed about your tax relief options and to adjust your strategy as needed, as your financial situation may change over time.
If you are experiencing difficulty with tax debt and require assistance in negotiating with the IRS, please contact COTTS LAW – A Tax Resolution Law Firm. We will evaluate your circumstances, assist you in selecting the most suitable resolution, and advocate on your behalf to secure the most favorable result.
It is important to bear in mind that resolving tax debt at an early stage can help you avoid additional penalties and interest, as well as provide you with a clearer path to financial stability. If you are prepared to investigate your options for resolving tax debts with the IRS, please reach out to our team today to schedule a complimentary, obligation-free consultation at 361-866-3819 or visit www.cottslaw.com.
