Let’s be honest, no one likes or wants to pay taxes. This is especially true for individuals experiencing financial difficulties or small business owners who are operating in the red or on a slim profit margin. However, the consequences for failing to file or pay one’s taxes can result in an individual incurring hefty fines and may even lead to criminal charges.
For individuals who are dealing with tax debt, it’s wise to consult with a tax attorney to understand what one’s rights and options are with regard to dealing with the Internal Revenue Service. The IRS is among the most feared of all federal agencies for a reason and the agency is notorious for taking swift and often punitive action against delinquent taxpayers.
To prevent the IRS from garnishing one’s wages or filing a lien against one’s property, it’s important to take steps to resolve outstanding tax debt. In cases where an individual’s tax liabilities are overly burdensome, he or she may be able to negotiate the amount and terms of repayment with the IRS by submitting what’s known as an offer in compromise.
Like any other type of creditor, above all the IRS wants to collect the maximum amount of outstanding debt possible. In some cases, however, a taxpayer may lack the financial means to repay the total amount owed to the IRS. In such cases, one option is to submit an offer in compromise in which a taxpayer agrees to repay a certain percentage of an outstanding tax bill according to agreed upon terms.
Settling a delinquent tax bill through an offer in compromise is not an option for every taxpayer and a taxpayer whose offer is accepted must abide by strict requirements and terms. It’s wise, therefore to consult with a tax attorney prior to responding to any IRS notices or applying to the offers in compromise program.
Source: IRS.gov, “Offers in Compromise,” 2015