Will IRS Settle Debt For Less?

If you, like millions of other Americans, owe a significant amount to the IRS, you are probably feeling desperate to find a way to get rid of this debt. Other than finding out if there is a way you can pay what you owe in monthly installments or any other fragmentary way, the next question that most likely comes to your mind is whether the IRS will settle for any less than you owe.

What Payment Options Does The IRS Offer?

There are basically three options available to you to settle your debt with the IRS. You can choose:

1. To enroll in a payment plan
2. To request a postponement in the collection
3. To settle the debt for less

What Happens If You Select The Third Option?

The IRS defines a settlement for less than what you owe as an “offer in compromise”. In order to qualify for this option and have the IRS settle your tax debt for less money than what you owe, you must meet some strict requirements, such as:

1. Your income
2. Your ability to pay
3. Your expenses
4. Your asset equity

The IRS recommends that you explore all available options before selecting this one. The reason for this is because, while evaluating your case, some actions may be taken such as placing a lien on your property. This may make it hard for you to sell it or refinance your mortgage.

Also, keep in mind that if you want to go this way to settle your debt, the IRS will expect to offer at least as much as your net worth. How much? Everything you owe minus your debt. It means you will feel as though you have declared bankruptcy, which is why you should take this road only as a last resort when everything else has failed.

How Can You pay The Money You Owe To The IRS?

The IRS offers you several ways to send them the money you owe. Among them:

1. By accessing irs.gov/payments and selecting to pay your taxes through direct-pay from your bank account or by using a credit or debit card
2. Through the electronic federal tax payment system – This is the most favored option for businesses or when you need to make large payments. You need to enroll in order to use this payment system
3. By opting for electronic funds withdrawal – This is done as you e-file your taxes
4. By sending a same-day wire – Although you may incur some bank fees
5. Through a check or money order
6. By paying in cash at a retail partner
7. By applying online for a payment plan

Will You End Up In Jail Simply Because You Owe Money To The IRS?

Providing that the money you owe on your back taxes is not due to cheating or trying to play games with the tax collector, you will not end up in jail. However, you must be prompt in responding to the notices sent to you by the IRS. Remember that there are always options available to you to find the right way to settle this debt.

Don’t Despair!

You can see the light at the end of the tunnel if you follow the rules of the IRS, are honest and reasonable. Make your best effort to pay off the balance you owe and put this situation behind you. You don’t have to face the IRS alone, call the experts at Premier Tax Service to help you with your IRS debt settlement today.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.