People owe money to the government for taxes several reasons. Your need for tax debt settlement may be due to failing to pay taxes and penalties, or due to improper filing of taxes. Regardless of the reason for your unpaid taxes, a tax debt settlement can save you money and stress if done right.
If you want to settle your tax debt with the IRS, you will need to make sure that you have complied with the rules regarding tax filings and that you have filed any unfiled tax returns.
The process of debt settlement with the IRS is then similar to the traditional one –you negotiate to lower the amount of money you have to pay. This can be done by either hiring a debt settlement company or doing it yourself.
Every time you consult with your auditor, be sure to keep records of your negotiations with IRS through notes. Typically it will take several months before any settlement is approved and finalized since the process involves many levels or departments of the IRS. Taking notes is helpful, especially when you receive documents in the mail that do not correspond to what you initially agreed upon.
Most of the time, when people owe a certain debt, penalties can be charged. This will cause the debt to become much larger. However, if you have undergone certain justifiable circumstances such as natural disasters, stolen files, or bad accounting, the IRS can forgive those penalties. The IRS may also be willing to reduce or forgive penalties if you have shown efforts to settle your debt. This modification of penalties is referred to as Penalty Abatement.
The most common advice given for those negotiating a debt settlement with the IRS is to first consult with tax experts and professionals who can help you reduce your tax debt. Specifically, tax lawyers know the tricks of trade when it comes to handling the IRS and providing you with the best deal possible.