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Tax Debt Settlement

by Thomas Morva

Tax debt settlement pertains to unpaid taxes owed to the government. These taxes could have been personal or business taxes. But for some reason, if they have not been paid in time, they become overdue. And the government could enforce payroll garnishment, tax levies and other stringent measures if you do not fulfill the due tax. Thus arises the need to settle this debt of taxes.

Tax debt can be settled by the offer-in-compromise method. But you must qualify for the same, as per IRS rules. And if you do, you will be required to pay a small percentage of what you currently owe to settle your tax debt. The IRS arrives at this amount after calculating via a complex series of formulas that return the amount that needs to be legally collected from you. And these formulas are very sensitive to all number figures. So be very accurate in giving your expense and income details.

When your offer in compromise is accepted, a contract is signed with the IRS, outlining that you agree to file and pay your future taxes on time for at least the next five years. Once signed, the IRS cannot change your payment amounts or charge any additional interest or penalties for the tax years you agreed on. Once you have fully paid the offer in compromise to the IRS, you will be cleared of the entire tax debt, and any associated liens held against your name, credit, and property will also be released.

A number of companies help you file for such types of tax debt settlement. They assist you in completing the paperwork and also submitting the offer in compromise. They guide you so that you get the lowest tax amount settled under IRS guidelines. These tax debt negotiations generally take six to nine months to complete. Companies like Washington Tax Service, Tax Resolution Services and National Tax Relief work on tax debt settlement. Check the reputation of the company and its representative before hiring it. The representative handling your tax debt should be a CPA (certified public accountant), EA (enrolled agent), or attorney. He must also be qualified in accounting, tax skills, and representation experience, to handle your case diligently.

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