Bringing Down the Burden of Tax Debt – Offers in Compromise

Tax Act

People all over the world are struggling with debt in the current global financial climate. For most people these debts will be to do with credit cards and loans, or having over-extended on a mortgage. For a small number of people however, it will be large tax debts owing that are causing them trouble. And often these debts can be just as stressful and just as crippling, with the belief that there is nothing you can do when you face going under, simply because you are dealing with the IRS. To a certain extent this is true – the IRS expects its taxes to be paid. But it is worth bearing in mind that in some cases it is possible for a certain amount of leeway to be given, or even an exception to be made, and that tax debt can be reduced through something called an Offer in Compromise.

Such a deal is rare, but comes about when the IRS either thinks there will be little or no chance of you paying the full tax debt owed, or it is in dispute with you about your total tax liability and whether you owe what they think you owe. In certain of these cases the IRS is permitted, at its own discretion, to look at, consider and then accept your submission of what is known as an Offer in Compromise. The Offer in Compromise is essentially an offer that you will make to the IRS that suggests a figure you think you can pay that is less than the figure they are asking for. Unbelievable as it may sound, they will often be willing to accept such an offer because they will look on it in such a way that they are at least going to recoup a portion of the debt you owe. Without that Offer in Compromise you may go bankrupt or not be able to pay them any of the outstanding debts.

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Dealing with IRS Tax Debt

Dealing with tax debt is different from how you handle your other debts. But you need not worry since it can be managed given the right amount of patience as well as the willingness on your part to lower down your debts.

For starters, getting debt help is highly recommendable especially for those who do not know where and how to start eliminating their outstanding balances with their creditors. Seeking for professional assistance is a very sensible thing to do because you will have to think of it as an investment in order for you to live a comfortable and financially secured life in the future.

Tax Act

Managing tax debt on your own – If you do not want to spend money to pay for debt relief services, you may opt to control your tax debts on your own. You can do this by requesting copies of your tax returns and double checking it for any discrepancies. From there, you can choose which option you can take.

Get professional help to deal with your tax debts – People with low tax debts can get away without the assistance from financial counselors, however for those who happen to owe thousands of dollars, get expert help from debt relief companies. Here are several things that you can check and counter-check in order for you to ensure that the company can truly extend their services to you:

Amount being charged or rate of services – There are several companies that can give you a quotation for the whole duration that you are going to require their services, while there are some companies that charge by the hour. Whichever way you prefer, bear in mind a budget and stick to it so that you will not have any added troubles.

Their credibility as a company – While there are many companies out there, you still need to check the legitimacy of the agency that you are going to tap. Professionals who are dealing with tax debts need to be certified public accountants, tax attorney, or an enrolled agent.

Several of the debt strategies that they can suggest to you, apart from double checking your tax return documents, include the following: installment agreement, filing for bankruptcy, offer in compromise, and partial payment.

You see, dealing with tax debt is not an entirely complicated process. Given the right time and strategy, you will be able to control your balances and slowly pay them all off.