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Installment Agreement for Repaying Back Taxes

September 18th

Many people faced with huge mountains of back taxes are seeking solutions. Most are just ordinary citizens who have found themselves saddled with a burden they cannot afford to pay back; most are looking for a way to compromise and get out of their debt. Many people see offers on television claiming to settle back taxes for pennies on the dollar, an enticing prospect. Retaining the services of a tax debt lawyer is the best first step toward eliminating your debt due to back taxes.

Installment Agreement vs. Offer in Compromise

The television ads are referring to a repayment scheme for back taxes called the offer in compromise. The offer in compromise is a negotiation strategy where a tax debt lawyer presents a repayment plan to the IRS, usually a lump sum payment at a reduced amount. This strategy can work, but has many limitations, and rarely results in the ‘pennies on the dollar’ amount advertised.

Alternatively, offering an installment arrangement to the IRS can still result in a reduced payment for your back taxes over time, and is more likely to be accepted than the offer in compromise. An installment agreement is a renegotiated payment plan which stops the IRS from pursuing you as a noncompliant account, while reducing the principal owed and showing good faith. The principal will continue to accrue interest during repayment, so this is an option for those who can afford to make payments that cover the interest and part of the principal.

A tax debt lawyer will help you determine how best to approach your IRS debt and pay off your back taxes.

 

Strategies for Eliminating IRS Debt

September 4th

Saddled with IRS debt from past tax returns? If so, it can feel like there is no way out. Any tax debt lawyer can tell you that IRS debt is not dischargeable in bankruptcy, meaning even that powerful tool will not help you escape crushing tax debt. The good news is that there are answers out there.

Retain a Tax Debt Lawyer

A tax debt lawyer is a licensed professional and among the few people permitted to present cases to the IRS. A tax debt lawyer will work to get you out from under your IRS debt without destroying your finances and all you have worked hard to build. In many cases, this is achieved through an offer in compromise.

An offer in compromise is a petition to the IRS to pay a portion of the debt owed while being forgiven the remainder. It is the actual process behind many tax debt lawyers’ television commercial advertising IRS debt settlements of pennies on the dollar. In fact, such drastic reductions are uncommon, but the offer in compromise will result in a significantly reduced overall payment than the amount owed in IRS debt.

The offer in compromise means that you will be obliged to make a lump sum payment up front, so it is not always the best option for those who may be lacking the liquid assets to make such a payment. Other common negotiating strategies for reducing IRS debt include agreements to pay in installments, and the ‘not currently collectible’ designation, whereby the IRS agrees not to pursue tax debt collection for an agreed-upon period. The best course of action is to consult a tax debt lawyer and determine together your best strategy going forward.

 
 
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