Settling past due tax is very tricky particularly if you do not ask for a tax professional to help you during this difficult time. If you owe less than $10,000 in past due tax, you can be in dialogue with the IRS until an agreement how to pay the debt is reached. However, not all people can pay their debt in full. For this reason, many taxpayers turn to various IRS debt relief programs to resolve their issues.
To settle past due tax, you must make a settlement with the IRS. To do this, you need to make sure that you are in full compliance with filing of taxes. Ensure that any unfiled tax returns are submitted to the IRS.
On the other hand, if you failed to file the documents that are required, it is best to hire a tax professional to file an amendment return. This will help minimize the amount of taxes owed. Once you and your tax consultant assess your situation, you can determine the right program to solve your past due tax. Here are some of the tax settlement programs offered by the IRS that will have you paying less than the actual debt you owe.
Offer-in-Compromise
This is by far the most common past due tax settlement taxpayers go for when they deal with the IRS. However, this is also the hardest settlement to qualify for because it would mean convincing the IRS that your offer is equal or greater than the amount they want to extract from you. This method allows a taxpayer to pay less than the amount of money they owe to the IRS. If accepted by the IRS, the remaining tax liability of a person is wiped clean once the agreed amount has been paid.
Partial Installment Payment Agreement
This agreement allows the taxpayer to pay back all the past due tax in a per monthly basis. This offer is available only to people who are unable to afford the required minimum amount for regular installment agreement.
Penalty Abatement
This debt program enables the taxpayer to eliminate all or some of the penalties added to the debt. However, this agreement does not eliminate any of the base amount of owed tax. The fact is, the IRS uses penalty charges as a means to make people pay past due tax, when they realize that the taxpayer has genuine reasons for not paying their taxes on a timely manner, they will allow penalty abatement, which minimizes the actual cost of the debt.
Here are just some of the programs available for taxpayers if they want to resolve their past due tax for less. It is best to look for a tax consultant to help you determine the best action to take. Our site offers a variety of tax debt solutions for various needs. For information, read our articles and start checking with us for regular updates.