Anyone who has ever been in the unfortunate position of being accused of wrongdoing by a federal government agency knows it’s best to take action quickly and defend your interests.
Unfortunately, navigating a complex issue like an IRS settlement is no easy task.
Many people are paralyzed with indecision because they feel that taking the wrong action will be worse than doing nothing at all. They may be concerned that they’ll undermine their interests, including their security and property if they submit statements or documentation.
It’s right to have a healthy concern for your financial well-being in an encounter with the IRS. However, it’s never a good idea to do nothing at all. Expert help can make a tremendous difference.
Because any dealings with the IRS can be complicated and emotionally charged, there’s a lot of misinformation online about what steps ordinary taxpayers should take to get an IRS settlement.
The experts at True Resolve Tax have helped hundreds of taxpayers through the process of getting an IRS settlement.
Today, we’ll answer common questions around getting an IRS resolution.
What is an IRS Resolution?
“IRS resolution” is a general term for any agreement that allows you to pay back your tax debt on terms more favorable than a single lump sum payment. There are many different types of resolution available, and thousands of taxpayers seek out resolution every year.
What Does an IRS Resolution Mean for My Assets?
One of the most important reasons to seek out an IRS resolution is to protect your assets. This is especially important for high net worth individuals. In a worst-case scenario, these taxpayers might face the seizure of assets such as real property and possessions such as vehicles.
There are certain limits on the belongings the IRS can target. For example, the IRS can’t usually seek to take possession of a taxpayer’s sole residence. However, IRS agents aggressively seek out ways to settle outstanding debts. It’s common to seize tax returns and garnish paychecks.
When you enter into a negotiated resolution with the IRS, you regain peace of mind.
Once the resolution process is underway, you no longer need to worry about unexpected twists and turns such as wage garnishment. Everything will be in writing and, as long as you maintain your obligations under the terms of your settlement, there will be no surprises to worry about.
Asset seizure is a costly and time-consuming process. With recent cuts in the IRS budget, there are fewer agents available to oversee such a process. By signaling your willingness to cooperate, you make it much less likely that you will be targeted by such extraordinary actions.
What Types of IRS Resolutions Might Be Available?
A negotiated resolution with the IRS typically takes one of the following forms:
A monthly installment agreement is one of the most common forms of IRS settlement and also among the simplest. There are several different types of installment agreements. In general, the IRS will look at your annual gross income and divide by 12 to determine the appropriate monthly payment.
The amount of an installment payment should be aligned with your ability to pay.
Partial Payment Installment Agreement
In some cases, taxpayers who are unable to pay their debt in full over the statutes through an installment agreement may be eligible to set up an Installment Agreement that will allow them to repay what they can even though it will not pay the debt in its entirety.
Offer in Compromise
An Offer in Compromise or “OIC” is one of the more difficult IRS settlements to obtain. Under this plan, you must make an offer to settle out the tax debt for a fraction of what is owed. An OIC is paid over a period of five to twenty-four months.
An OIC payment requires you to pay the offered amount quickly. However, it provides you with greater financial security by allowing you to resolve the issue more quickly. You will not need to worry about ongoing accumulation of interest associated with a long-term tax debt.
Currently Not Collectible
In rare circumstances, a debt may be found to be “Currently Not Collectible.” This means the IRS will agree to cease collection activities for, on average, one to two years. It is a recognition on the part of the IRS that the individual cannot pay, usually as a result of financial hardship. This can provide you with additional time to negotiate for more favorable IRS repayment terms.
No matter what your financial situation, IRS resolution is in your best interests if you are unable to pay your complete tax obligation comfortably. Seeking out resolution is not dishonest or suspicious. Instead, it shows good faith in that you are willing to pay to the best of your ability.
To find out more or get started with your IRS settlement, contact True Resolve Tax today.