Tax settlements are important for people who have tax debt and have been contacted by the IRS. They are an agreement made with the IRS or state taxing board that enables the taxpayer to settle their tax debt for less than they owe. This option is occasionally accepted by the tax authorities if the taxpayer is able to show that they are unable to pay the full amount of their debt. 

Many tax debt situations are not appropriate for tax settlements, however, if you have unpaid taxes, you may want to apply. The IRS will weigh your circumstances and determine whether your situation is eligible for a reduced settlement of your taxes. When determining eligibility for tax settlement, the IRS typically looks at the taxpayers’ specific situation in regards to current tax regulations. 

Is a Tax Settlement Worth it?

If you have unpaid tax debt, being approved for a tax settlement can be extremely beneficial. There are multiple reasons why tax settlement is one of the most desirable options for taxpayers who are dealing with the IRS or state tax authorities. 

One benefit of being approved for a tax settlement is that you will be able to pay less now on your tax debt. In fact, depending on how much you owe, you may be able to pay a significant amount less. If you meet the qualifications for a tax settlement, you may have a tax resolution in a short time. 

You and the IRS will have to agree upon a specific amount that you will pay in order to settle your tax debt. Once you pay the agreed-upon amount, your debt will be considered settled in full. It will then be free from penalties and late fees. 

Along with paying less for your tax debt, a tax settlement can also prevent tax liens, levies, and wage garnishments. Through obtaining a tax settlement, you can avoid having a lien placed on your home or business, as well as having a bank levy placed on your accounts. With the settlement, you are agreeing to pay a certain amount in order to have your debt considered settled in full and to avoid these penalties

How Tax Settlement Works

Taxpayers who have unpaid tax debt can apply for a tax settlement. They must meet certain qualifications for approval. However, if they are approved for a tax settlement, they will be able to either negotiate to repay a lower amount of taxes or they will work with the IRS to determine which tax resolution program is best for their specific situation. Other tax repayment programs enable the taxpayer to repay their taxes over time, instead of paying a lower amount all at once. 

When applying for a tax settlement program, the taxpayer must decide which relief program they would like to use. They will then have to submit the right forms for their program to the IRS and they will need to meet the qualifications for approval. If they are approved for their chosen tax relief program, they will have to abide by the agreement they make with the IRS

Before they are approved for their tax program, the taxpayer will have their forms and information reviewed by the IRS. These forms can be filled out by the taxpayer themself, or they can hire a tax relief company to help them. A professional tax relief company will be able to help them determine which program they are most likely to be accepted for based on their specific situation. They can then help the taxpayer fill out the forms accurately and submit them to the IRS for review. 

Once approved, the taxpayer will negotiate with the IRS or the state tax authority in order to determine the details of their tax settlement. However, if the taxpayer has hired a tax relief company, the company will have experts who are able to negotiate with the IRS on their clients’ behalf. 

Hiring a tax relief company can be a great decision for the taxpayer, as they will have advice and guidance from experts. The results of tax relief when a tax relief company is involved tend to be quite favorable for the taxpayer. The taxpayer often ends up paying less by hiring a tax resolution company, as the amount they end up paying to settle their tax debt can be greatly reduced. Certain tax professionals, such as enrolled agents, even cost significantly less than others, bringing the taxpayers’ costs down even further. 

Some tax programs require the taxpayer to pay the full amount of their taxes in order to settle their account, however, they are given an extended period of time for repayment. With this program, the taxpayer agrees to make regular installment payments for a determined length of time, enabling them to pay off their debt in small increments. This is a great option for those who do not qualify for a reduced tax amount but are unable to pay the full amount of their taxes at once. 

During the predetermined time of repayment, there are no late fees or penalties assessed, providing the taxpayer with relief as they pay off their tax debt. Taxpayers have the choice to pay their taxes back in one lump sum. Those who cannot are given a set amount and set dates for making payments. These details are determined by the IRS and agreed upon by the taxpayer. 

After applying for a tax relief program and being approved by the IRS, the taxpayer, and the tax relief company, if hired by the taxpayer, will work together to come to a tax debt agreement. Once all parties agree upon the details of the tax settlement, the taxpayer is considered to be in good standing with the IRS. The standing will remain throughout the tax settlement period unless the taxpayer fails to hold up their end of the bargain, or if they continue to shirk the next year’s taxes. 

Who Can Receive a Tax Settlement

Tax settlement is offered by the IRS to taxpayers who have tax debt that they are struggling to pay or to those who have valid reasons for requesting an end to tax penalties. 

It’s important to understand that most people are not qualified for tax settlement and only a small percentage of those who apply are approved by the IRS. When the IRS looks at an applicant, they consider their financial ability to repay their debt. 

Taxpayers who undergo financial difficulties are likely to be approved for a tax settlement. Through their circumstances, they are able to show the IRS that repaying the full amount of their taxes at once is likely to cause an extreme financial burden. 

Sometimes the IRS is able to show that a taxpayer will not be able to repay their taxes in one lump sum. For these taxpayers, they typically approve the payment agreement option, which allows them to make regular monthly payments until their debt is paid in full. 

IRS Tax Relief Network

At the IRS Tax Relief Network, the experts are ready to help you find relief. We will talk to you in order to determine the program that is best suited to you and your specific situation. 

Our team of experienced professionals can help you choose the right program and help you apply. They will walk with you through every aspect of the process, making sure you understand your options. 

By hiring the IRS Tax Relief Network, you are setting yourself up for success as you roll into the new year.