A compromise offer is an agreement between a taxpayer and the IRS that settles a tax debt for an amount less than the total amount due. A transaction offer is an option when a taxpayer can't pay all of their tax obligations. It is also an option when paying the entire tax bill would cause financial difficulties for the taxpayer. The goal is to achieve a commitment that is adapted to the interests of the taxpayer and the agency.
A Commitment Offer Allows You to Pay Off Your Tax Debts for Less Than You Owe. Sometimes, the IRS considers reaching an agreement that will allow you to pay a reduced amount of what you owe in back taxes, called a transaction offer. You must convince the IRS that you cannot pay what you owe and offer to pay the reduced amount in a lump sum or in short-term installments. The taxpayer will first need to determine what type of tax settlement they want to request and then submit the appropriate forms to the IRS for review before making a decision.
Surprisingly, firms that specialize in tax resolution can also help reduce costs for individuals, since seeking the help of a tax relief professional usually has a very positive outcome. A tax settlement is an agreement acceptable to the IRS or state tax authorities that allows a taxpayer to withdraw an outstanding tax debt for an amount lower than the amount originally due. Tax authorities sometimes allow this type of tax settlement when there are extenuating circumstances that prevent the taxpayer from paying the entire debt. The main factor the IRS considers when determining whether a taxpayer will qualify for a tax settlement is their financial situation.
Before submitting your offer, you must (file) all tax returns that you are legally required to file, (make all required estimated tax payments for the current year) and (make all required federal tax deposits for the current quarter) if you are a business owner with employees. In many cases, a tax settlement requires paying the full amount of the tax settlement within a specific period of time. Even if the IRS tries to collect a tax debt, the taxpayer can file collection resources to try to stop a tax lien, lien, or seizure before the statute of limitations expires. If this seems too complex for you to solve on your own, or you just want to ensure that you have the best chance of success, you can also call a tax relief company or a lawyer who specializes in taxes.
While not every situation is appropriate for starting a tax settlement process, people who owe taxes often realize that tax authorities are willing to explore the individual situation to determine if it is possible to reach a tax settlement. In any of these situations, the taxpayer must meet the requirements of one of the tax settlement programs established by the IRS. Death and taxes are the two great certainties of life, but every year a considerable number of people who owe the Internal Revenue Service act as if they don't understand the maxim. The IRS offers agreements to taxpayers who are having difficulty paying their tax debts or who have valid reasons to reduce their penalties.
The award-winning team of tax professionals at Optima Tax Relief provides comprehensive tax relief services that can help with just about any state and IRS tax problem. If this is not possible, the IRS or tax authorities will establish a payment schedule that is within the taxpayer's means, and the last payment will coincide with the final date attached to the tax settlement offer. During that period, no back taxes or tax interest will be charged on the balance of the tax settlement.