What is a Tax Settlement?
A Tax Settlement takes place when a person or organization settles their back tax liability with the IRS (Internal Revenue Service). This involves an agreement with the IRS to pay back taxes in part or full through one of the IRS’s back tax settlement programs.
Who can qualify for a Tax Settlement?
Anyone with back tax liability may be able to utilize a tax settlement, depending on the individual situation. Please contact us today to find out if you can qualify for a clean start with the IRS.
Before the IRS will consider settling back taxes, a tax payer must be compliant with current tax obligations. This generally means that all past-due returns must be filed and the tax payer must remain compliant with ongoing payments. Compliance situations vary so it is recommended that you discuss the situation with an expert sooner rather than later.
How does the Tax Settlement process work?
Generally speaking the first step to a tax settlement is to show the IRS that you are serious about resolving your back tax liability. You must make sure that all past returns are filed correctly and that you are paying your current taxes timely.
Next your ability to pay back taxes is determined. To do this, the necessary expense test is run. The necessary expense test determines the amount of expenses necessary to provide for a taxpayer and his or her family’s health and welfare and/or the production of income.
Once the necessary expense test and other factors are determined, an Offer in Compromise (OIC) is presented to the IRS. This effectively begins the negotiations involved in a tax settlement and moves you to closer to a clean start with the internal revenue service.