The Internal Revenue Service (IRS) is the government agency responsible for collecting taxes from individuals and businesses in the United States. Dealing with the IRS can be nerve-wracking, and if you owe them money, it can be even more daunting. However, the IRS understands that not everyone can pay their taxes on time, and they offer several programs to help individuals get back on track. In this article, we’ll discuss everything you need to know about settle with irs.
1. Reasons for Settling with the IRS
There are various reasons why you may need to settle with the IRS. If you owe taxes and can’t afford to pay them, you may be eligible for an installment agreement. An installment agreement is a payment plan that allows you to pay your taxes over time instead of all at once. If you are going through a financial hardship and can’t pay your taxes, you may be eligible for an offer in compromise. An offer in compromise allows you to settle your tax debt for less than you owe.
2. Eligibility for Settling with the IRS
To be eligible for an installment agreement, you must owe less than $50,000 in tax debt and have filed all your tax returns. To be eligible for an offer in compromise, you must have filed all your tax returns and owe less than $100,000 in tax debt. In addition, you must be able to prove to the IRS that you can’t pay your taxes in full now or in the future, or that paying your taxes would cause financial hardship.
3. How to Apply for Settling with the IRS
To apply for an installment agreement, you can complete Form 9465, Installment Agreement Request, and mail it to the IRS along with your tax return, or apply online. To apply for an offer in compromise, you’ll need to complete Form 656, Offer in Compromise, and send it to the IRS along with a $186 application fee. You’ll also need to provide detailed financial information, including your income, expenses, debts, and assets.
4. Risks of Settling with the IRS
If you choose to settle your tax debt with the IRS, there are some risks involved. The IRS may reject your installment agreement or offer in compromise if they determine that you can pay your taxes in full. If you’re approved for an installment agreement, you’ll be required to pay a fee to set up the plan, and the IRS will charge interest and penalties on your unpaid tax balance until it’s paid in full. If you’re approved for an offer in compromise, you’ll be required to comply with all IRS rules and regulations, and any unpaid tax balance will be considered forgiven and canceled.
5. Seeking Professional Assistance for Settling with the IRS
Dealing with the IRS can be stressful and complicated, especially if you owe them money. Seeking professional assistance from a tax attorney, accountant, or enrolled agent can help you navigate the IRS’s settlement programs and negotiate a settlement that works best for your financial situation. A professional can also help you determine your eligibility for an installment agreement or offer in compromise and represent you before the IRS if needed.
Conclusion:
Settling with the IRS can be overwhelming, but it’s a necessary step to take if you owe them money. Understanding the programs available to help you pay your taxes is crucial to avoid tax liens, wage garnishments, and other penalties. Before applying for an installment agreement or offer in compromise, make sure to review your financial situation and determine your eligibility. Seeking professional assistance can also help you achieve the best settlement possible. Remember, the IRS is willing to work with you, but it’s up to you to take the first step.
