IRS Debt Settment Procedure

Many people find the settling Internal Revenue Service (IRS) dues very difficult. This is a situation where many Americans go through in their lives. However it is possible to get out of IRS tax debt by following a few strategies. One of the best options you have is offering an amount in compromise.

With this option, you settle all your IRS debts for a lower amount than you owe the IRS. The options you have here is making a lump sum payment or opting for a short term payment plan at a reduced dollar amount. Another method of IRS debt settlement lies in the consent of an installment agreement in between you and the IRS. Here you promise the IRS to make a monthly payment to pay off your IRS dues.

The third option for IRS debt settlement is referred to as the partial payment installment agreement. This is sort of a new debt management program where you reach and the IRS reach a long term payment plan where you get to pay off the IRS at a reduced dollar amount. Then there is the not currently collectible option you have where the IRS voluntarily does not collect the tax debt for a year or so. Filing for bankruptcy is also an alternative for IRS debt settlement. Here your tax debts are discharged under the rules of Chapter 7 or 13 of the rule book.

Most people tend to choose the offer in compromise option. However because of its complexity, most people also enlist the help of a tax professional with track records of negotiation with the IRS. Though the professional will not be able to determine if your IRS debt will be reduced with OIC, they can help in navigating the complicated bureaucracy to get your desired outcome. This is a lengthy procedure that takes about 1 to 2 years to process.

Installment agreement is the best option for those taxpayers who don't qualify for an Offer in Compromise, bankruptcy relief or Statute of Limitations expiration. Those taxpayers who don't qualify for both OIC and Statute of Limitations should opt for currently not collectible. In such a situation, the statute of limitations continues and IRS does not pursue collection actions. However when the financial situation of the taxpayer improves, the IRS removes the file from CNC status to active collection status.

So it can be seen that though IRS debt does not just vanish, it can be settled before the escalation of IRS efforts and before you accrue additional penalties and interest with the help and guidance of a professional tax counselor.

Useful Tax Resources