If the IRS has contacted you because you owe money on your federal taxes, you may think there's a one-size-fits-all solution.
That's not so, and it helps to know what the possibilities are so you can find the one that suits your situation.
Then you're in a position to negotiate wisely with the IRS.
There are many ways your tax debt can be settled.
You can ask the IRS to negotiate a compromise payment with you.
That's called office in compromise, and it's like any other debt situation.
It can be advantageous to the institution you owe to get something rather than nothing, and perhaps you can even get them to agree to pennies on the dollar.
Another solution is to plead poverty and have the fines reduced or eliminated.
This is called penalty abatement.
You may not realize that when you don't pay your taxes, you are not only at some point asked to pay them but also interest and a heavy penalty.
If you can get the heavy penalty taken away, you're at least only dealing with the debt itself and perhaps the interest.
When you look at the number you owe without the penalties, it will seem much more manageable.
Never forget that there's a statute of limitations to tax debt collection.
The IRS cannot ask you to justify a tax return that is decades old.
It has ten years from the time of assessment to start the collection process.
If it doesn't act within that time, you have the legal right to have your tax forgiven.
Where this can really work to your advantage is when the IRS decides to put a hold on your case.
They may label your case as having an uncollected status once they look at your account and your finances.
They realize they can't collect anything from you at the moment, and suspend action.
If they do this and get past the ten-year mark, you won't owe the tax.
If you're in this position of having a tax debt and are being asked by the IRS to settle, it's a good idea to see a tax professional to help you choose the best option for yourself as you speak with the IRS.
That's not so, and it helps to know what the possibilities are so you can find the one that suits your situation.
Then you're in a position to negotiate wisely with the IRS.
There are many ways your tax debt can be settled.
You can ask the IRS to negotiate a compromise payment with you.
That's called office in compromise, and it's like any other debt situation.
It can be advantageous to the institution you owe to get something rather than nothing, and perhaps you can even get them to agree to pennies on the dollar.
Another solution is to plead poverty and have the fines reduced or eliminated.
This is called penalty abatement.
You may not realize that when you don't pay your taxes, you are not only at some point asked to pay them but also interest and a heavy penalty.
If you can get the heavy penalty taken away, you're at least only dealing with the debt itself and perhaps the interest.
When you look at the number you owe without the penalties, it will seem much more manageable.
Never forget that there's a statute of limitations to tax debt collection.
The IRS cannot ask you to justify a tax return that is decades old.
It has ten years from the time of assessment to start the collection process.
If it doesn't act within that time, you have the legal right to have your tax forgiven.
Where this can really work to your advantage is when the IRS decides to put a hold on your case.
They may label your case as having an uncollected status once they look at your account and your finances.
They realize they can't collect anything from you at the moment, and suspend action.
If they do this and get past the ten-year mark, you won't owe the tax.
If you're in this position of having a tax debt and are being asked by the IRS to settle, it's a good idea to see a tax professional to help you choose the best option for yourself as you speak with the IRS.
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