| | Offer in Compromise: The Best Way for IRS Tax Debt Settlement
If you owe back taxes to the IRS, you may have to suffer a lot since IRS back tax does not get easily discharged. With the help of IRS tax debt settlement program, you can try to fix up your debt muddle. But, it is for certain that in most cases your application will be turned down. Only a few special cases will be deemed to be serious enough to be granted tax exemption. IRS has laid down specific circumstances when your debt can be settled at reduced amount.
1) If there is any doubt or any dispute regarding the collect able status of the debt, IRS may halt sometime or stop collecting the debt right away.
2) If any mistake happens in examining the tax payer’s legitimate amount of debt or interpreting any law, IRS cannot ask for the back taxes from you. If IRS fails to judge a tax payer’s evidence, then also the same will apply.
3) In the third case, a debtor may have financial capacity to pay off back taxes. But if it becomes unprofitable, inconvenient or inadequate to retrieve the back taxes, IRS may leave the matter and give you tax relief.
In order to qualify for ‘offer in compromise’ a tax payer must fulfill other criteria. For examples,
1) He must not be through bankruptcy procedure.
2) He should fill up all previous tax return forms.
3) He needs to purchase a $150 form and a 656A form.
There are different income categories laid down by IRS. If anyone falls below the low income category level, IRS may relieve him from purchasing the $150 form. However, 656A form is needed to be filled up by the tax payer. It details out every category and helps to determine whether a tax payer is eligible for the tax exemption or not.
Making a lump some payment is a way to settle tax debt. IRS allows you to pay in 5 to 6 installments around 20% of the amount due. And this due amount has to be included in the form 656A.
There is also short term periodic payment benefit that a tax payer can avail. IRS may give you 60 monthly installment payment facilities. But, all payments have to be met within 24 months of the IRS offer.
Last edited by Samatg : 09-01-2011 at 10:40 PM.
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