A transaction offer is an agreement between a taxpayer and the IRS that settles a tax debt for less than the total amount owed. A transaction offer is an option when a taxpayer cannot fully pay their tax liability. It is also an option when paying the full tax bill would cause financial difficulties for the taxpayer. The goal is to achieve a commitment that meets the best interests of both the taxpayer and the agency.
The IRS will sometimes consider an agreement that allows you to pay a reduced amount of what you owe in back taxes, which is 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. Yes, it is possible to pay off a tax debt for less than what you owe to the IRS. Use a solution known as a Commitment Offer or OIC.
This is the solution that is being announced and that presumes that it can “settle the tax debt in cents on the dollar”. You usually have two years from the time the IRS first tried to collect unpaid taxes to apply for aid. Initially, the IRS needs to identify how much you can pay each month if it were to prepare a typical installation agreement or installment plan. Any tax agent who doesn't ask a client why they owe money to the IRS is not carrying out all the due diligence process that would be required for a proper appeal.
Any reputable tax relief company will first obtain key financial data from its clients before giving them a realistic assessment of what they can do for a reasonable fixed fee. This is because they can better identify requests and understand if the taxpayer meets the requirements, and they also understand that the IRS is likely to say yes. In addition, you can make your settlements through the Electronic System for the Refund of Federal Tax Obligations (EFTPS) website. If you have a garnishment and you can't afford to live on leftover money, contact the IRS to propose a change.
The number of customers who get satisfaction from tax settlement companies is negligible and most are practically in financial distress. These tax specialists offer tax relief solutions for those who are concerned or are suffering from tax garnishments, wage garnishments, bank levies, or other IRS tax collection measures. When evaluating your application, the IRS will consider your net worth and your sources of credit, such as credit cards and home equity lines of credit. Clients have complained to the Better Business Bureau (BBB) and the Federal Trade Commission (FTC) that some of these firms have not achieved any of the promised results and, in fact, the organization was a scam.
My Tax Settlement only suggests tax relief firms that offer affordable rates, offer payment options, and have tax attorneys on staff. If you receive a refund for filing within that two-year period, the IRS will apply it to your agreement. If you meet the borrowing criteria and have filed your previous tax returns, the IRS will use a formula to arrive at a monthly payment.