Any Truth To The Anecdotes About Neglectful Taxpayers Who Settle Back Tax Debt For A Small Fraction Of The Original Amount?
Yes, there certainly is. This is not just the essence of urban folk tale. It occurs frequently through the use of a application that the feared Internal Revenue Service, themselves, has devised to assist hooligan individuals settle back taxes. The program is known as an "Offer in Compromise", or more briefly an "OIC". The IRS has been known to allow as little as one (yes that's right, the figure "1") per cent of an quantity unpaid on a tax allegation and call it square.
These OIC's are totally up to the government's decision, on the grounds that there is no authorized entitlement to have a valid tax debt downsized by the IRS. That being said, the IRS must give a accurately delivered Offer appropriate judgment.
review the case of Henry who was living on a static income and realized himself in debt to the IRS in the amount of $13000. That's because a back tax bill can grow at a fast clip with all the additional fees, penalties and interest that they append to it. These things take on a life of their own after a while. Henry did the smart thing and enlisted the help of a counselor to represent his case to the IRS. The commissioned agent managed a huge reduction from the full amount of $13000, getting it whittled down to a doable $2000! This was an amount that Henry could be financially able to repay and get back to his life without the IRS stalking him.
If this OIC idea is starting to sound like it could be the answer for you, keep in mind that merely wanting to do a deal with the IRS is not sufficient of a platform. After all, wouldn't every person like to have his or her tax indenture discounted? You first have to measure up for an Offer in Compromise by showing the IRS that one of these type of conditions exist:
What the IRS calls "Doubt as to Collectiblity". Basically put there is some question as to whether they can collect the debt from you.
"Doubt as to Liability". There is some prudent question as to whether you owe the tax bill at all. This one is highly a long shot at best.
Lastly, due to some lessening circumstances, the payment of the full choke would cause you an economic difficulty or would be unfair or unjustified.
The final analysis here is if you think you might qualify for one of these titillating reductions in your back tax debt, you should try to find professional help in making the call, and if a good basis exists, hire them to be proxy for you before the IRS. This is not a thing you want to do on your own. The saying from the law profession " he who acts as his own attorney has a fool for a client" would also have bearing on in going before the Internal Revenue Service with an Offer in Compromise.
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