Falling behind on your debts is never a positive experience. However, if those delinquent debts include federal taxes, you have a right to be concerned. The federal government has authority and power beyond what most creditors have, especially when it comes to collecting what you owe.
However, the IRS also offers numerous ways to deal with tax debt before it reaches the critical stage where your possessions and wages are at risk. In fact, you may qualify for a reduction in your tax debt called an offer in compromise.
How an OIC works
It is not unusual for a tax bill to come as a shock, and if you struggle to make ends meet, as many in Connecticut do, the additional pressure of owing the IRS may be the last straw. Nevertheless, if you qualify for an offer in compromise, you may find the IRS is willing to accept the amount you offer as satisfaction for your debt. The IRS considers each case individually, examining the following circumstances:
- What is your income?
- What are your normal expenses?
- What is the value of any assets you may own?
- What is your ability to pay what you owe the IRS?
- Have you exhausted other payment methods?
You must first determine whether you are eligible, and the IRS website provides a tool for helping you confirm this as well as to figure out a reasonable offer to present to the IRS. Your attorney can also assist you with this.
If the IRS accepts your offer, you must be careful to comply with the terms of the agreement, including filing future tax returns and paying according to your offer. If the IRS rejects your offer, you still have the option of appealing the decision.
How an attorney can help
As with any complex debt, the best step you can take is to communicate with your creditors. You may find them amenable to negotiation if it means they can get some of what you owe instead of going through the hassle of taking legal action. Allowing a skilled attorney to handle the communication between you and the IRS may save you from much of the stress and confusion that often comes with owing taxes.
You may find peace of mind in obtaining the help of a legal professional for completing the proper forms and organizing your application for the best results. Additionally, the representation of an attorney may go far in avoiding the filing of tax liens or halting any collection activities that may be in progress.