Most citizens in the US comply with the tax authorities on a voluntary basis. They file their tax returns and pay whatever is due in order to keep the country strong and financially stable.
The most common reason for failing to keep to the tax rules is a lack of information. And in most cases the IRS will take steps to help the taxpayer comply with all the relevant rules.
But if can happen that you get into a position where you owe the IRS an amount of money that you can't pay. For example, your tax returns might have been incorrect for a number of years, meaning that you've paid less tax than is due. If that happens over a number of years, the outstanding amount can be substantial when penalties and interest are taken into account.
Well, the good news is that there are IRS debt relief options that can help people or businesses in your position.
IRS Debt Relief 1) IRS Tax Relief Settlement: This will allow a taxpayer to settle their debts for a percentage of the amount owed, depending upon their age, assets and personal budget.
IRS Debt Relief 2) Offer In Compromise: This scheme was developed by Congress to allow taxpayers a one time only chance to clear their debt to the IRS for a fraction of the actual amount due. The IRS will look at your case and will, according to certain guidelines, agree to settle your debt for a certain amount. However, as you would imagine, there are certain obstacles that must be overcome before your tax debt is reduced.
Tax legislation gives the IRS power to settle federal tax liabilities for less than the true amount when the taxpayer can show exceptional circumstances. For example, if they can show that tax collection would be unfair, inequitable or impose financial hardship.
The main problem with this scheme is that it's extremely popular. In fact so many unsuitable cases were submitted that the IRS, in an attempt to discourage OICs, started to investigate each case closely. However, since the early 1990s, due to a mounting backlog of uncollected taxes, the IRS has eased their requirements in order to settle more cases.
In fact, the OIC scheme is one of the most powerful IRS debt relief tools available to taxpayers. Millions of dollars have been saved by taxpayers who have used the Offer in Compromise scheme. However, before you think that this is the answer to all your problems, let me warn you that the IRS settles less than one percent of tax debts through the OIS scheme.
You can submit your own OIC application, but due to the complexity it's best to secure professional help. A tax attorney is invaluable for their experience in preparing applications and negotiating with the IRS. They may also be required for an appeal if your case is rejected.
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