In these difficult financial times it is not surprising that people are falling behind in their debt obligations. It is not easy to continue with monthly payments when your income has dropped. While you may be able to work out payments with most creditors Federal tax debt negotiation is a whole different game.
When your house payment falls behind you may face foreclosure and lose your home. Other debts such as credit card balances or other loans can be resolved through filing bankruptcy. Federal taxes that are owed can not be cleared through bankruptcy or foreclosure however.
Many people who have lost a significant amount of income may still owe a bundle on money earned in the past. For some it may be an accumulation of several years of back taxes that continues to grow each day with fines and interest. It can become a heavy burden for families that are struggling to make ends meet.
An Offer in Compromise is an option for eligible taxpayers who want to settle their tax debt for a lessor amount than what is due. You will be required to explain how your current financial circumstances make it difficult to pay the outstanding taxes owed. The program was set up to help tax payers get a fresh start with the IRS. If you offer is reasonable based on your financial status most likely it will be accepted.
An Offer in Compromise may not be filed if you are in open bankruptcy proceedings. That is something to consider before taking any other steps you may be considering to relieve your overall debts. Another requirement is that you are current on having filled your taxes.
There is a lot of paperwork involved with an Offer. You will need to provide complete documentation of your current financial situation. If paying your tax bill has become a true liability toward the welfare of your family the IRS will most likely accept a compromise settlement. Taking this step would provide you a fresh start with the IRS. Request a Form 656 Booklet to read more detailed instructions and information about how to prepare and submit your offer.
Learn more here: tax debt negotiation
