Tag Archives: payment plans

3 Ways to Start Eliminating Your Tax Debt

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If you have a large IRS tax debt, the amount you owe can be daunting. To avoid being charged additional fees and making the debt larger, it is important to act and begin the tax settlement process quickly. Even if you cannot pay it off all at once, there are options you can pursue to eliminate your tax debt. Here are three methods that can help you to settle or eliminate your tax debts.

Offer in Compromise It is possible to reach a tax settlement with the IRS that is less than the full amount you owe. This plan is called an Offer in Compromise. Although filing an Offer in Compromise can be time consuming and complicated because the qualifications are very specific, this is a powerful option because it allows for the resolution of all your outstanding tax balances at the same time, plus the suspension of collection activities while your offer is being considered.

Installment Agreements An Installment Agreement is a payment plan that is negotiated with the IRS or a State Tax Agency. Instead of paying one lump sum, the taxpayer agrees to pay a tax debt over a specified period of time. The terms of an agreement will be contingent on the tax liability amount and the taxpayer’s current and projected financial status (income and assets).

Uncollectible Status If you do not have sufficient income or assets to pay your tax debt, you may be eligible for the temporary designation of Uncollectible. If you have been granted this status, all collection activity stops until your situation is reevaluated, and the IRS determines that you have the ability to pay your debt. This can give you more time to work on paying off your debt without accruing additional fees and penalties.

Since the IRS prefers to receive the full amount of tax debt that you owe, they may not give you the best advice when you are seeking to use one of the tax debt elimination options above. A licensed tax professional can negotiate with the IRS on your behalf and help you to get reach the best possible tax settlement based on your situation.

If you need help with an outstanding tax debt, our experienced tax settlement professionals can help. We can also work with you if you need help filing your taxes. Please visit professionaltaxresolution.com for more information on our tax resolution services. You may also call us at (877) 889-6527 or email info@protaxres.com to receive a free, no obligation consultation.

IRS Back Tax Tips – Help with Late Tax Bills – Pay Your Tax Debt

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Did you receive an IRS notice that you owe back taxes? While owing money can be a big worry, ignoring the problem will only make things worse. There are options to pay your tax debt, even if you can’t do it all at once.

If you need help with tax resolution because you owe back taxes, you can take advantage of different methods of payment or request that the payments be broken up into installments. Here are some tips:

  • A late tax bill from the IRS is expected to be paid promptly, including the taxes owed, penalties, and interest. You may want to get a loan so you can pay it in full to avoid making installment payments if you do not already have the money ready. A bank loan could have a lower interest rate than what you would have to pay in additional interest and penalties.
  • Tax bills can be paid via credit card. Your credit card could also have a lower interest rate than what you would have to pay in additional interest and penalties.
  • Tax bills may also be paid through checks, money orders, cash, cashier’s checks, or electronic fund transfers.
  • If you are unable to pay in full, you may be eligible to request an installment agreement between you and the IRS. The agreement would break up the amount due into monthly installments. Make sure that your required returns are all filed and your estimated tax payments are current.
  • You can request installment payments whether your tax bill is over or under $25,000. You should be informed within roughly 30 days if the IRS approves or denies your request, or if they need more information.

If you receive a late tax bill, our experienced professionals can help you resolve your back tax issues. For more information about our tax debt resolution services, visit us today at www.professionaltaxresolution.com. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to receive a free, no obligation consultation.

Payment Installment Options for an IRS Offer in Compromise

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The IRS Offer in Compromise tax settlement option allows a taxpayer with an outstanding tax liability to settle the debt for less than the full amount owed. Although the Offer in Compromise has very specific acceptance criteria and may be difficult to obtain, it is a very attractive tax debt settlement option for those taxpayers who do qualify.

The IRS has made the Offer in Compromise a particularly attractive and popular tax settlement choice by offering three different payment plans. The flexibility makes this tax settlement choice attractive to taxpayers who have varying financial situations. Each of the payment options (outlined below) includes an initial payment to be followed by scheduled installment payments.

• The Lump Sum Cash Payment Plan requires an initial payment which must be equal to 20% of the Offer in Compromise tax settlement amount. The balance of the negotiated tax relief amount must be paid in five or fewer installments scheduled regularly from the date the compromise offer is accepted. (sapns2.com)

• The Short Term Periodic Payment Plan requires an initial payment to be followed by regularly scheduled installments that begin while the offer is being negotiated. The balance must be paid off within 24 months from the time the IRS receives the Offer in Compromise application.

• The Deferred Periodic Payment Plan requires an initial payment to be followed by regularly scheduled installments that begin while the offer is being negotiated. The balance must be paid off in more 24 months from the time the IRS receives the Offer in Compromise application but before the ten year statutory period for collection is up.

Hence, the IRS Offer in Compromise is not a one stop shop. The versatility of the available payment plan options accounts for some of its popularity and make it an attractive tax debt settlement choice for a wide range of taxpayers.

At Professional Tax Resolution we make sure that you take advantage of the best tax resolution option available. We carefully analyze the tax debt and financial situation of each of our clients and only recommend filing an Offer in Compromise when we believe it will be accepted. If we determine that you meet the candidacy requirements for an Offer in Compromise, we will work with you to prepare the offer and to submit all of the required documentation. We will also represent you before the IRS or State Tax Agency until the process is complete.

Click the “Learn More Link” or Call Toll-Free (877) 889-6527 to have one of our CPA’s provide a free, no obligation consultation regarding your eligibility for an Offer in Compromise.

Understanding The Three Settlement Types for an Offer in Compromise

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The Offer in Compromise is a specific tax relief option made available by the IRS through which a taxpayer offers the IRS a certain amount of money in exchange for which the IRS agrees to cancel the taxpayer’s outstanding tax debt. While it is an effective tax settlement option for a very specific group of taxpayers, the Offer in Compromise definitely does not represent a blanket solution for anyone with an outstanding tax liability. The acceptance criteria are very explicit and, since many applications are submitted that do not meet the published IRS guidelines, the rejection rate is high. When considering filing an application for an IRS Offer in Compromise it is important, not only to understand the specific qualifying criteria, but also to be familiar with the available settlement alternatives.

There are three payment options available for an IRS Offer in Compromise. An application requesting any one of the three payment plans requires a $150 application fee (unless the taxpayer submitting the application qualifies for a low income waiver or is submitting the application for the reason that he or she doubts they actually owe the outstanding tax debt). All three tax settlement options require an initial payment (unless the taxpayer qualifies for a low income waiver) followed by a lump sum or a specific set of scheduled installments. The plans vary as to the calculation of the settlement amount, the amount of the initial payment, the number of periodic payments and the time period over which those payments will be made.

The three settlement alternatives for an Offer in Compromise are summarized below:

1) Lump Sum Cash Payment
• Generally requires a 20% payment upon the filing of the application with the balance paid within five months of acceptance. Low income taxpayers may be exempt from the initial payment requirement.

2) Short Term Periodic Payment
• Payments are made in monthly installments with the balance being paid in full within 24 months of the IRS receiving the Offer in Compromise. Taxpayers must generally make the proposed monthly payments while the IRS considers the offer unless they qualify for the low income waiver.

3) Deferred Periodic Payment
• Payments are made in monthly installments with the balance being paid in full in 25 months or more but within the statutory collection period. Taxpayers must generally make the proposed monthly payments while the IRS considers the offer unless they qualify for the low income waiver.

The flexibility of the settlement alternatives available for an Offer in Compromise makes it a viable and effective tax relief alternative for taxpayers with varying financial situations. However, since the Offer in Compromise involves a settlement for an amount less than what the taxpayer actually owes, it can be difficult to obtain. The IRS will carefully review the available assets and income of the taxpayer and the taxpayer’s ability to pay the original tax debt. During the review of a submitted Offer in Compromise by the IRS, all other collection activity will stop. The job of a qualified tax resolution firm is to assist in demonstrating a taxpayer’s inability to pay the full amount of his or her tax debt and to prove that it is in the best interest of the IRS to accept an offer for less than the full amount.

When selecting this tax relief option and the accompanying payment plan, the taxpayer should be well aware that it is an official contract with the IRS and comes with a specific set of financial responsibilities. If an individual entering into an Offer in Compromise fails to comply with any of the contractual provisions set forth in the agreement, the IRS will probably revoke the contract and reinstate the full amount of the original tax debt.

The Offer in Compromise is one of numerous tax relief options open to a taxpayer who may be facing an impending tax lien, tax levy or wage garnishment due to a large outstanding tax debt. For help in determining whether your tax debt situation meets the acceptance criteria for an Offer in Compromise and whether it is the best tax settlement option for your specific needs, contact an experienced tax professional at www.professionaltaxresolution.com.

Another Tax Settlement Option – A Partial Payment Installment Agreement

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Due to the current economic climate, more taxpayers are finding themselves with significant outstanding tax debt. Many taxpayers owe both the Internal Revenue Service and their state (or states) for multiple years. Some taxpayers are simply overwhelmed by the numerous IRS Notices and Letters from the IRS that they receive. In actuality, there are numerous ways to resolve outstanding tax liabilities. However many taxpayers chose the worst choice of action; which is to do nothing. Taxpayers that simply do not respond to attempts to collect outstanding debts debt find themselves the subject of increasingly more aggressive collection efforts by the IRS and State tax agencies. Eventually the IRS and State tax agencies will resort to filing tax levies and tax liens on bank accounts and properties or start a wage garnishment in attempt to collect the outstanding tax debt. Unfortunately due to the amount of time that has passed since the initial notice, many taxpayers are shocked to find that the balances owed may have increased by 50% or more due to the various penalties and interest assessed.

A fairly new and less used IRS tax settlement option is the Partial Payment Installment Agreement. The IRS implemented this additional payment option, on January 17, 2005, specifically for taxpayers who have outstanding federal tax debt. The legislation includes language amending Internal Revenue Code and allows the IRS to enter into installment agreements that result in full or partial payment of the tax debt. What is so different is that prior to enactment of this 2004/2005 legislation, taxpayers who could not fully pay their outstanding tax liabilities could only enter into an installment agreement with the IRS for full payment of the liability. For those with limited monthly cash flow, this left some unable to meet the repayment plan criterion and put them at risk for default.

For those with an inability to pay the full balance of a tax debt, prior to the partial payment installment agreement, the only option to settle a tax debt was the Offer in Compromise. The process of submitting an offer in compromise is generally more involved than the partial payment installment agreement. Of course both tax settlement options are carefully reviewed by the IRS and acceptance is limited to taxpayers that can clearly demonstrate the inability to settle tax liabilities in full.

Taxpayers who are being considered for a partial payment installment agreement to settle an outstanding tax debt must be able to provide complete and accurate financial information that will be carefully reviewed and verified. Taxpayers will also be expected to use equity in assets to reduce or fully pay the amount of the outstanding tax debt liability.

In addition, taxpayers granted partial payment installment agreements will be subject to a complete financial review every two years. As a result of this review, the amount of the installment payments could increase or the agreement could be terminated, if the taxpayer’s financial condition improves.

While the partial payment installment agreement has drawbacks, it does provide taxpayers with another tax settlement option. A qualified tax settlement firm can help you evaluate your specific situation and present you with your options to revolve your outstanding tax debt.

Visit www.professionaltaxresolution.com for more information about the qualifications for tax debt relief through a partial payment installment agreement or other tax settlement options.