IRS Debt Negotiation Options

The Benefits and Drawbacks of Your IRS Debt Negotiation Options

If you’ve ever attempted to contact the IRS via phone, you are probably aware of the countless transfers and what seems like never-ending wait times, which frequently cause aggravation. Imagine attempting to settle your tax bill in these circumstances without being fully aware of your options.

It might seem like an uphill battle, which makes the process of getting your tax difficulties resolved all the more difficult. It’s crucial to understand all of your options when it comes to bargaining with the IRS because of this.

Here are the most popular ways to pay off tax obligations and provide advice on how to handle this difficult process more skillfully (and with the correct aid).

Options for IRS Negotiation

1. Installment Agreements – full vs. partial pay

Instead of paying your tax bill in one large payment, you can spread it out over several manageable months with an installment arrangement. If you can afford to make regular payments but are unable to pay your tax debt in full, this is a good choice for you.

• How It Works: You suggest a monthly payment amount that works for your spending plan, and the IRS looks over your financial records to see if it makes sense. If accepted, you will sign a legal contract and begin making monthly payments until the debt is settled in full.

• Advantages: By choosing this option, the IRS is prevented from levying bank accounts or garnishing wages, among other collection steps.

• Cons: Over time, the total amount you owe may rise as interest and penalties keep adding up on the outstanding debt. But one of our areas of expertise is “Partial Payment” Installment Agreements, when we arrange “reduced” monthly payments with the IRS.

2. Offer in Compromise (OIC)

An arrangement that permits you and the IRS to settle your tax liability for less than the entire amount owing is known as an offer in compromise. It is intended for those who can prove they have experienced financial hardship and are unable to pay off their debt in full.

• How Operates: You offer the IRS a proposal explaining the amount you are able to pay and the reasons behind your belief that this sum constitutes a complete settlement. After that, the IRS will examine your financial status and supporting evidence to assess how reasonable your offer is.

• Advantages: The debt will be settled and you will pay less than what you owe if approved. Your tax obligation may be greatly decreased by choosing this option.

• Cons: Not all offers are accepted, and the process can be drawn out and difficult. Strict qualifying standards must also be met, and there is a substantial non-refundable application cost.

3. Currently Not Collectible (CNC) Status

You may be eligible for Currently Not Collectible status if you’re going through a lot of financial difficulty and are unable to pay any taxes. IRS collection efforts are temporarily suspended in this state.

• How It Works: You give the IRS proof that your financial circumstances prevent you from being able to pay your obligation. After considering your case, the IRS may decide to put your account in CNC status, which stops them from pursuing collection efforts against you as long as you are unable to make payments.

• Advantages: This choice offers short-term protection against IRS collection proceedings, including bank levies and wage garnishments.

• Cons: Penalties and interest will still mount, and the IRS may closely monitor your financial circumstances to decide whether to modify or prolong your status.

4. Penalty Mitigation

One possible remedy for fines imposed for non-filing or late payments is to ask for a penalty abatement. This implies that, if you have a valid reason, you can request that the IRS waive or reduce your penalty.

• How It Works: You have to prove to the IRS that uncontrollably bad events, such a severe illness or a natural disaster, caused you to be late with payment or filing. The IRS may lessen or waive the penalty if they determine that your justifications are sound.

• Advantages: Penalties might be reduced or eliminated to reduce your overall tax obligation.

• Cons: You will still be in charge of paying the initial tax obligation as well as any interest that has accumulated.

Advice on How to Bargain Effectively with the IRS

1. Compile Your Financial Information: Be sure you have a complete picture of your financial status, including records supporting your earnings, expenses, and assets, before engaging in negotiations with the IRS. This will assist you in making a reasonable proposal.

2. Be Truthful and Accurate: To prevent issues, give the IRS true information. Falsifying information about yourself or the situation can result in more fines, rejections, or even delays.

3. Take Expert Advice Into Account: Reliable experts in tax relief are a great asset and may help you bargain with the IRS. They can assist you in navigating each step of the challenging procedure because they have experience managing tax debt.

4. Stay in touch: Adhere to your IRS payment agreement and promptly communicate any issues.

5. Examine Your Selections Frequently: Over time, your financial circumstances may change, so it’s critical to be informed about your possibilities for tax relief and to modify your plan as necessary.

Get in touch with Ace Plus Tax Resolution if you need assistance negotiating with the IRS because of snowballing tax balance. We will evaluate the circumstances, assist you in selecting the best course of action, and work to get the best result possible on your behalf.

Recall that paying off your tax debt as soon as possible can help you prevent further penalties and interest as well as give you a clearer route to financial security. When you’re prepared to investigate your best resolution options, give our staff a call at (213) 600-7388 to for a free, no-obligation Consultation.