One of the most common tax debt help solutions for debtors is an offer-in-compromise. An Offer-in-compromise allows debtors to settle any delinquent tax debts for less than the actual amount. The Internal Revenue code gives the IRS the authority to accept less than the total amount of tax liability owed in any civil or criminal case prior to the case being referred to the Department of Justice.
To convince the IRS to pay less than the actual amount of tax debt owed, the debtor must present proof that he has no means of paying his debt or is not actually liable to the debt owed. This type of tax debt help provides many benefits to debtors such as:
• Solving an intimidating tax problem
• The IRS will hold off debt collection during the time the offer-in-compromise is considered
• Debtors save more money on debt payments
• Any tax liens will be released once offer-in-compromise agreement is implemented
• Debtors do not need to file for bankruptcy
• Reduces dischargeable taxes in bankruptcy
Of course, just like any other types of tax debt help, an offer-in-compromise does have its drawbacks such as:
• Debtors must fully disclose their financial situation to the government
• Debtors must waive certain tax benefits once IRS approves this tax debt help
• Any other state taxes are not resolved by federal offer-in-compromise
• Debtors must comply with all federal tax laws for the next five years
• Debtors are expected to waive certain credits and refunds
• All successful offer-in-compromise agreements are kept on public file in the District Office for a year
Following the implementation of this tax debt help, debtors must remain current on all tax obligations for five years. If a debtor fails to pay his current income tax or any other tax for that matter, the IRS will revoke the offer-in-compromise agreement. Indeed, an offer-in-compromise is a great way to eliminate any tax debt. However, if you do not hold up your end of the bargain, you are likely to pay more than the actual debt you owe due to interest and penalty charges that will incur.
Finding the best tax debt help does not need to be difficult or complicated. Our site offers a wide range of articles and tips that are useful for different types of tax problems. Get in touch with our tax experts and know your options.
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