Perhaps one of the most frightening entities to owe money to is the Internal Revenue Service. Doubtless, many Texas residents have heard or shared horror stories about tax audits or IRS debt collection procedures. While owing past due taxes is serious, it doesn’t have to ruin your entire life. With the right knowledge and assistance, you may be able to negotiate with the IRS to create a situation that works for all involved.
One tool that is available to tax payers who cannot pay all of their delinquent tax debt is called the offer in compromise. Usually, the tool is afforded to tax payers who are facing special circumstances or economic hardship, but it’s possible for anyone to pursue the tool. It does cost $186 in an application fee to file an offer in compromise, though exceptions are made for low income individuals.
The IRS reviews each request for an offer in compromise and makes a determination on the case. Even if an offer is denied, the IRS may work with you to create an installment agreement for paying back what taxes are still owed. Individuals who default on any type of agreement may be able to get a second chance, but there is a fee. In some cases, the total amount of taxes becomes due once an individual defaults.
While you can complete many of the forms dealing with taxes yourself, it often pays to have someone assist with negotiations. Someone who understands the complexities of tax law may be able to use specific laws or rules to your advantage. A professional can also help you shore up tax processes so you don’t face a similar situation in the future.
Source: Internal Revenue Service, “Collection Procedural Questions” Dec. 23, 2014