| There are many tax payers that are currently living | | | | their tax liability by negotiating an offer in compromise. |
| with large amounts of debt. This total debt usually | | | | A tax professional is your best chance at obtaining this |
| includes a portion of IRS debt, which is typically | | | | type of agreement, as it needs to be handled by |
| attributable to a prior balance that is owed to the | | | | someone with the right expertise in order to yield the |
| government. This IRS debt continues to increase | | | | best results. An offer in compromise will typically be |
| because of the interest rate that is added onto it. | | | | approved by the IRS if it is clear that the taxpayer is: |
| One way that many of these tax payers are reducing | | | | (1) unlikely to pay the debt in full, (2) the taxpayer does |
| their IRS debt is by seeking the advice of a tax | | | | not have any assets to pay the debt, or (3) payment |
| professional that has plenty of experience in the tax | | | | of the debt would create a financial hardship for them. |
| field. By working with an expert, a taxpayer may be | | | | Bankruptcy |
| able to reach a compromise that will help them reduce | | | | Many taxpayers that are in severe financial distress |
| their tax liability and allow them to completely pay it off | | | | cannot pay their IRS debt or any other debts that |
| forever. Some of the options that may be available to | | | | become due. A taxpayer may use bankruptcy as a |
| reduce taxpayer debt are outlined below. | | | | way to free themselves from their tax liability, but the |
| Installment Agreement | | | | IRS has strict rules on the allotted time given to |
| Most taxpayers that have balances owing to the | | | | discharge certain income tax debts. If you are |
| government generally do not disagree with the tax | | | | considering this as an option, you should consult with a |
| amount -- they simply cannot afford to make the tax | | | | tax professional before making this decision. |
| payment in full. Instead, the tax payer may be able to | | | | Regardless of the method you choose to satisfy your |
| work with IRS to create an installment agreement that | | | | IRS debt, you need to make sure that you are |
| will allow the debt to be paid in full over time. This | | | | properly handling the matter. If you receive a letter or |
| agreement will stop any further collection activities by | | | | notice from the government, you need to make sure |
| the IRS, but the balance does continue to incur interest | | | | that they are not requesting information or action from |
| fees until it is paid off. | | | | you which would require a professional response. You |
| Offer in Compromise | | | | should seek the advice of a tax professional that can |
| Some taxpayers may be able to substantially reduce | | | | successfully represent you. |