Question: I owe a lot in back taxes. I’m constantly getting threatening letters from the IRS. This has become a big problem that I have no idea how to solve. Can you help me?
Answer: For what it’s worth, take some comfort in knowing that you are not alone. There are millions of Americans in similar situations, dealing with debt hanging over their heads and concerned about how it will affect their future.
The good news: You have many options. To fully understand and take advantage of your options, we urge you to see a qualified tax resolution professional. He or she will take a close look at your previous returns, looking for mistakes that may have resulted in an inflated tax debt amount. This process alone can substantially lower your IRS debt.
Once you and your qualified tax professional have analyzed your previous returns, the next step is to negotiate a resolution with the IRS. You will most likely be looking at one of two options – the Offer in Compromise or the Installment Agreement.
The Offer in Compromise was created for people who owe a substantial amount to the IRS but who, for whatever reason, are unable to pay their tax debt off, even over time. The Offer in Compromise allows taxpayers to negotiate a settlement amount that will take care of the entire tax debt once and for all. This settlement agreement can lower the tax debt by a significant amount. If you do not qualify for the Offer in Compromise – and to do so you must be able to prove eligibility – then you may consider the Installment Agreement, which allows you to pay off your debt by making manageable monthly payments.
Question: What’s the best option for me-an Offer in Compromise or an Installment Agreement?
Answer: I wish it were as simple as saying one option is better than the other. But that’s impossible to say. The truth is, the Offer in Compromise and Installment Agreement are both excellent programs suited for specific and different circumstances.
The first thing you should do is determine your current circumstances. The best way to do this is by consulting with a qualified tax professional who will analyze your previous returns and your current financial situation. From this information, you and your tax professional can begin to assess whether the Offer in Compromise or the Installment Agreement would be your better option.
The difference between the two programs is this; the Offer in Compromise is geared to taxpayers who owe a significant amount of money to the IRS, but who, are unable to pay this debt, even over time. The IRS allows the taxpayer to make an offer that would settle that debt once and for all. Oftentimes this offer amounts to a substantial discount. By contrast, the Installment Agreement is intended for taxpayers with debt who are unable to pay the debt off in one lump sum but who have the resources to pay the debt down over time. The taxpayer makes monthly payments that over time will eliminate the tax debt.
If you owe the IRS, the State, EDD or State Board of Equalization, my office can help you find the best solution to resolve your tax liability. Call 866-477-7772 to request a free confidential consultation. I have offices in Glendale, Cerritos and Valencia.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.