What is an IRS tax settlement? How can I settle my IRS tax debt? How much will I have to pay to settle my IRS tax debt? These are common questions that taxpayers will ask a tax attorney. The article below has been drafted by a tax attorney at The McGuire Law Firm, who has settled many tax debts with the Internal Revenue Service and is experienced in working with taxpayers to resolve their IRS debts and problems.
An IRS tax settlement is when a taxpayer owes money to the Internal Revenue Service and is able to settle their tax debt for less than the amount of tax owed through an offer in compromise. For example, a taxpayer may owe $50,000 in back taxes and through the IRS Offer in Compromise Program, they may pay $15,000 for full satisfaction of the tax debt.
A taxpayer can settle their IRS tax debt by submitting an offer in compromise to the Internal Revenue Service Offer in Compromise Unit. An offer in compromise is prepared by completing Form 656, the necessary financial statement, which based off of the taxpayer’s circumstances would be Form 433A OIC and/or Form 433B OIC and providing all of the necessary attachments required. Once compiled the taxpayer will mail these documents along with the necessary application fee and payments to the proper IRS Offer in Compromise Unit. Your offer in compromise may eventually be forwarded to a different unit, but in the vast majority of cases, you will initially file your offer with the IRS at one of two offer in compromise units either Holtsville, New York or the Memphis, Tennessee Offer Unit. Once filed, your offer will be reviewed and it will be determined whether the IRS can process your offer.
Tax attorneys are constantly asked how much they will have to pay the IRS to settle their tax debt. The answer is always, it depends. The reason the offer amount depends is because there is no set percentage a taxpayer can pay or offer to guarantee acceptance of their offer. This is due to the fact that the offer amount is calculated via an equation and thus a taxpayer’s offer is amount is based upon their specific circumstances, not what Mr. Jones or Mrs. Smith may have been able to pay and settle their tax debt for.
An offer in compromise may be a viable way to settle your tax debt. I recommend that any taxpayer consult a tax attorney or tax professional if they are considering submitting an offer in compromise.
To speak with a Denver tax attorney contact The McGuire Law Firm and schedule your free consultation at an office in Denver or Golden Colorado.