10 Ways to Settle Your IRS Tax Debt

Do you Find dealing with the IRS Time-consuming, Intimidating, and frustrating? You aren’t alone.

While taxpayers might always represent themselves in front of the IRS, the majority rely on professional tax help (specialized IRS Tax attorneys, CPAs, and Certified Tax Resolution Specialists) in order to increase their likelihood of winning a tax settlement while minimalizing their contact with IRS agents. Owing to the Internal Revenue Service (IRS) money’s scary to many people. The IRS has the power to place a lien on your property, seize your assets, and garnish your wages in order to get the money that you owe them. But these actions can be stopped by promptly communicating with the IRS regarding your situation. Usually, the IRS is willing to work with taxpayers, and there are many options available so that you could resolve your debt issues.

As a creditor, the Internal Revenue Service carries the weight of the federal government behind it. In addition to having extensive methods to collect on the outstanding tax debt, the IRS also can be extremely patient. As long as the IRS knows it is going to get paid someday, it can wait until you are in a better financial position to pay. Of course, the longer you take to pay your tax debt, the more you will owe.

1. Installment Agreement:

A monthly payment plan for paying off the IRS. If you think you are a victim of a fraudulent investment scheme (“Ponzi” Scheme), where you have lost all or most of your investment, you may be eligible to take advantage of the United States Tax Code (law) to recoup 30% to 40% of your losses. This highly technical and complex process can help you reduce taxes paid in previous years resulting in a refund with interest.

2. Partial payment installment agreement:

Partial payment installment agreement:

A new debt management program where you’ve got a long-term payment plan to pay off the IRS at a lesser dollar amount. Much like a monthly credit card payment, IRS payment plans let you pay off in installments of your unpaid back taxes rather than all at once. A Certified Tax Resolution Specialist or well-qualified tax debt attorney will conduct a negotiation for the lowest possible monthly payment for your needs.

3. Offer in Compromise:

A program where you are able to settle your tax debts for less compared to what you owe. Needs to make a short-term or lump sum payment plan in order to pay off the IRS at a lesser dollar amount. If you owe the IRS more than you can afford to pay, this could be the plan for you. Essentially, an Offer in Compromise gives you the opportunity to pay a small amount as a full and final payment. If you qualify for the Offer in Compromise program, you can save thousands of dollars in taxes, penalties, and interest.

4. Not currently collectible:

A program where the IRS agrees voluntarily not to collect on the tax debt for one year or so. Currently Not Collectible means that a taxpayer has no ability to pay his or her tax debts. The IRS could declare a taxpayer “currently not collectible,” after the IRS gets evidence that certain taxpayers has the inability to pay. This is a convenient tool since you can file for a collection appeal for the sake of stopping an IRS seizure, lien, levy or the termination or denial of an installment agreement. The collection appeal provides you with the opportunity to elaborate on how you consider the situation might be solved without the need for the IRS seizure or levy.

5. Lower Your Debt With Credit Card Debt Settlement:


There are two methods of credit card debt consolidation: through a credit card debt settlement company or on your own. Credit card debt settlement companies should be avoided. They collect your payments for months before making a settlement offer – if they make an offer at all. Meanwhile, you continue receiving collection calls and negative payment marks on your credit report. You’ll get better and faster results in settling debts on your own. Final credit card debt settlement agreements should be in writing. Either draft an agreement of your own or have your credit card company send you an agreement. Make sure you and someone from your credit card company have both signed the agreement before you send payment.

6. File bankruptcy:

Income tax debts could be eligible for discharge under Chapter 13 or Chapter 7 of the Bankruptcy Code. Filing for bankruptcy’s 1 of 5 ways to Tax Debt Relief, but you should consider bankruptcy only if you meet the requirements for discharging your taxes. Chapter 7 provides for allowable debts’ full discharge. Chapter 13 gives a payment plan to repay a few debts, with the remainder of the debts discharged

There is no “secret magic” in paying off tax debts. These are the only 5 methods of getting out from under the IRS’ debt collection tactics that are aggressive. If a tax pro promises you that you can save “pennies on the dollar” through an offer in compromise, that person is probably more interested in selling you something you don’t need instead of focusing on your unique financial situation and determining what the best course of action is for you.

7. Release Wage Garnishments.

When you owe money to Uncle Sam, the IRS could levy your federal payments, salary, or wages until the levy’s released, your tax debt’s been fully paid off, or the time expires for legally collecting the tax. There’s room here to bargain for a release or modification to the garnishment if you don’t have enough money to survive with the levy.

8. Stop the IRS from Levying Your Bank Account.

The IRS can issue a bank levy in order to take your cash in checking and savings accounts to collect back taxes. When a bank account is levied by the IRS, the bank’s required to deduct whatever available amount in your account that day (and up to the IRS levy amount) and have it sent to the IRS in 21 days unless informed otherwise by the IRS. Part of the process of resolving your IRS debt is to obtain a release of the levy from the IRS.

9. Innocent Spouse Relief.

If you happen to inherit the IRS tax problems of your spouse, you have an escape route. If you could prove that your circumstances fit within the guidelines of the IRS for innocent spouse tax relief, you might not be subject to the taxes caused by your spouse or ex-spouse.

10. Pay Attention to the Expiration of the Statute of Limitations.

The IRS has 10 years from the date of an assessment (usually close to the filing date) to collect every tax, interest and penalties from you. An expert tax attorney, tax resolution specialist or tax CPA can help in resolving your IRS problems and back taxes by simply strategizing and advising with you to wait out the 10-year expiration date.

This is a useful tool because you can file for a collection appeal to stop an IRS seizure, lien, levy or the termination or denial of an installment agreement. The collection appeal gives you the opportunity to explain how you think the situation could be solved without the IRS seizure or levy.

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