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How to Negotiate a Tax Settlement with the IRS | Flat Fee Tax Relief | Florida | United States

Updated: Aug 11, 2020

The following article is brought to you by the tax professionals at Flat Fee Tax Relief. Our teams, located in Clearwater, FL, and San Diego, CA, provide valuable tax debt help at a very affordable fee.

How to Negotiate a Tax Settlement with the IRS. The IRS offers several tax relief options to settle, but you must to be proactive. For more than a decade, the Internal Revenue Service (IRS) has been more amenable to working out late tax payments (usually by installment agreements). It is to your advantage if you address an IRS problem up front. It is so much better to be proactive when negotiating with the IRS. It isn't a good idea to keep the IRS waiting for the tax debt to be paid or resolved. Here are your options and the steps you can take.

Fresh Start Initiative - A Fresh Start for Tardy Taxpayers

Back in 2011, the IRS rolled out the Fresh Start Initiative, geared toward giving late-paying Americans a path back to paying off their tax liabilities.

"We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start," then IRS Commissioner Doug Shulman said at the time. "These steps are good for people facing tough times, and they reflect a responsible approach for the tax system."

The IRS particularly focused on the following changes: Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.

  • Making it easier for taxpayers to obtain tax lien withdrawals after paying a tax bill.

  • Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement (using a debit card to pay the tax debt).

  • Creating easier access to installment agreements for more struggling small businesses.

  • Expanding a streamlined Offer in Compromise program to cover more taxpayers.

Always File Your Return

It's always nice of IRS to offer more tax relief options for struggling taxpayers, but you have to comply with the IRS code.

First of all: If, come April 15, you owe the IRS an amount that you cannot pay in one lump sum, it is important to file the tax return anyway.

If you do not file a tax return several things kick into overdrive. For one, failure to file penalties will be added to the tax debt. This will accelerate the accumulation of tax debt. For another, the IRS will create a tax debt called a Substitute for Return (SFR). The creation of an SFR allows the IRS to collect the tax debt. Finally, should you be unfortunate enough to get a levy on your wages and/or bank account, the IRS will insist on having all tax returns filed before release of any levy. This could prove difficult if you don't have the money to pay a tax preparer. Basically, taxpayers have three tax relief options for paying back taxes:

  1. Under an installment agreement, a taxpayer pays the amount due over a period of time.

  2. An Offer in Compromise involves the taxpayer paying one lump sum in an amount that is less than the amount actually owed.

  3. The taxpayer can request that the IRS temporarily delay collection until the taxpayer's financial situation improves (Currently not Collectible).

Being declared Currently not Collectible will last approximately 18 to 24 months. At the end of that period the Currently not Collectible can be renewed again. There will be a tax lien filed during the IRS hardship. Penalties will continue to enlarge the tax debt. The IRS hardship can be taken away at any time. The IRS is usually quite amenable to any of the above. The IRS wants to accomplish 2 goals. One is to collect money when able. The other is to close a file. All three tax relief options accomplish IRS goals. Whether it will accept an installment agreement request, or an offer in compromise, or a collection delay depends largely on your financial condition.

The Bottom Line

No-one is saying that the IRS is getting all warm and fuzzy regarding tax debt. The IRS offers tax relief programs for Americans to get back on track with their taxes. The key is to act quickly and work out a resolution as soon as possible. FLAT FEE TAX RELIEF - FLAT FEE TAX SERVICE


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