Do you think that an offer in compromise will settle your tax debt for pennies on the dollar? Maybe you have heard tax relief and tax settlement companies promising 100% success and tax debt relief of up to 99%? You need to be aware that tax settlements take into account most of you assets and your anticipated earningsthroughouta statute of limitations for tax debt collection period.
This is true; tax settlement can achieve a discount off of your current tax debt. Offers in compromise are held in reserve for thosewho don'tcontain the meansto pay the complete tax debt. But don't be mislead, your tax relief is not going to be a discount of 99-100% of your original liability. An offer in compromise is a reasonable offer to the IRS for what you can give.
The first step is to determine an precise amount you owe. Often, tax liens and wage garnishments are implemented because individuals haven’t filed their returns and the IRS has made estimations with overstate the tax debt owed. Bygetting your tax filings updated and by capturing all of the available deductions, it is possible to dramatically reduce your tax liability from what the IRS initially stated. If at that point you continue to possess a tax debt which you cannot pay, the next step is to determine an affordable amount to provide as a tax settlement. The IRS calculates a reasonable range for an offer in compromise determined by your assets (the home, our car, investments) together with your actual and anticipated income (your employment, alimony, child support, etc).
As you are able to see, hiring the right CPA that will help you not just determine your real liability but negotiate the best terms with the IRS is very important.
Do you want a fixed monthly paymentoption in order to handle your tax debt? If you're able to achieve a tax settlement that is lesser than your actual liability through an offer in compromise, there is a new simplified method of settling tax debts under the offer in compromise program. This new tax relief optionwill allow taxpayers a fixed per month payment option and will assist tax payers and practitioners in situations where the complete amount of the debt cannot be met. Under the program, the IRS will calculate the exact amount an individual will owe during the life of the offer in compromise payments.
The offer in compromise program’s purpose is usually to settle tax debts for the maximum amount a taxpayer pays. In some cases, the taxpayer is best able to resolve the debt by paying it off over a period of time. The newest, simplified offer will provide taxpayers a set month-to-month payment option, ending uncertainty about converting offer quantities into month to monthrepayments.
This new process will help taxpayers and practitioners in conditionswhere taxpayers are willing to pay their debts, but the maximum amount they could pay is not adequateto repay the complete amount of the debt. In this case, taxpayers aren't eligible for ordinary installment agreements, but they are going to be eligible for the new, fixed monthly payment option under the offer in compromise program. The IRS anticipates that this can not just help taxpayers but will also translate into increased collections in these situations.
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