How do You Negotiate a Settlement for Owed Federal Taxes?
Owing back taxes to the IRS can be a pretty scary experience. At times it can feel as if they hold all the power and that if you do not somehow find a way to pay what you owe they will make sure to throw the book at you and make your life a living nightmare. Many people are not aware that this is not really the case. The IRS ultimately wants to have all of the money you owe paid in full, but they will often times settle for getting monthly installments until the entire debt is paid off. The trick is learning how to negotiate a tax settlement that the IRS will approve. This is where the Offer in Compromise becomes a viable option to help you repay your back taxes.
There are certain requirements you will have to make in order to fully take advantage of an Offer in Compromise. You can expect to be rejected for your offer of a tax settlement if you actually possess enough money to pay the debt in full or if you own property that could be sold to pay your debt. The IRS will be much more aggressive in their attempts to collect their money if they know you have the ability to pay back what you owe.
Coming up with an Offer in Compromise that has a chance of being approved can be very tricky business. You cannot simply put down a random number and hope for the best. You need to sit down and determine how much you are actually able to pay. The IRS actually has two different forms you can use to find this information. Form 433-A and Form 656 will help you figure out the actual amount of the debt you can back each installment.
After you have this information you can file your offer with the IRS. They may not take your initial offer, but do not be discouraged. Change the amount of your offer and submit it again. You can also consult various tax professionals who can wrangle with the IRS and help come up with a figure that is reasonable for you to pay and that the IRS is willing to accept.
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