TheCPATaxProblemSolver Taxpayer Tribune 100 October 6 2023

Keith Jones, CPA Newsletter

How to Settle Your IRS Debt

Settling your IRS debt involves taking steps to resolve any outstanding tax liabilities you owe to the Internal Revenue Service (IRS). Here's an explanation of how you can go about settling your IRS debt:

Assess Your Tax Debt: The first step is to determine the exact amount you owe to the IRS. Review your tax returns and notices from the IRS to understand the source and amount of your tax debt.
Contact the IRS: It's crucial to communicate with the IRS as soon as you realize you have a tax debt issue. You can call them or visit your local IRS office to discuss your situation. They can provide information about your options and guide you through the process.
Consider Payment Plans: If you cannot pay your tax debt in full immediately, the IRS offers various payment plan options. The most common is the Installment Agreement, which allows you to make monthly payments until the debt is paid off.
Offer in Compromise (OIC): In some cases, you may be eligible to settle your debt for less than the total amount owed through an Offer in Compromise. This option is available if you can prove that paying the full amount would cause financial hardship.
Request a Temporary Delay: If you are facing a temporary financial hardship, you may request a temporary delay of collection efforts. This can provide you with some time to get your financial situation in order.
File for Bankruptcy: In extreme cases, filing for bankruptcy may help discharge certain types of tax debts, but this should be considered as a last resort and should be discussed with a qualified attorney.
Seek Professional Help: Dealing with the IRS can be complex, and it's often beneficial to consult with a tax professional, such as a tax attorney or CPA, who can guide you through the process and help you explore the best options for your specific situation.
Stay Current on Future Taxes: Once you have a payment plan or another arrangement in place, it's crucial to stay current on your future tax obligations. Failure to do so can result in further penalties and complications.

Remember that the IRS is generally willing to work with taxpayers who are genuinely seeking to resolve their tax debt issues. Open communication and a proactive approach are key to settling your IRS debt and achieving financial peace.