You may have heard that the Internal Revenue Service has a program to settle your delinquent taxes but you may not know what it is or if you qualify. If you are in this position then this article will help you.
The IRS is a tough creditor to have as under the law they have special powers to collect on delinquent taxes. Yet taxpayers do not know that there is a tax program whereby you can literally settle your taxes for pennies on the dollar.
This program is called the Offer in Compromise and allows individuals to have a fresh start with the Internal Revenue Service. Under this program a taxpayer makes an actual offer to the tax authorities to settle their debt for a specific dollar amount to be paid on a certain time line.
For example, you have John Smith who owes the government $ 12,000 for his 2012 taxes and $ 11,000 for his 2013 taxes. John is self-employed and does not have the $ 23,000 to pay off his delinquent taxes and is afraid the government will garnish his bank account. So John makes an Offer in Compromise with the IRS that states he will pay them $ 5,000 as full payment on the past due taxes. The government accepts John's Offer in Compromise and after payment of the $ 5,000 John's tax debt is wiped clean and the government releases its tax liens against John.
That in a nutshell is what an Offer in Compromise is. However it is very time consuming in preparing an offer to the government as they require a lot of financial information from the taxpayer. In addition, not every person even qualifies under this program as the government has certain criteria that must be met by the taxpayer.
To be successful with this program a person needs to make sure they have all their 'ducks in a row' so to speak even before submitting the offer to the IRS. This may include filing any past due personal tax returns or payroll tax returns. If a person is self-employed then the government will want a profit and loss statement from the self-employed person.
After an offer has been submitted to the government and while it is under consideration, then all enforcement actions against a person will be halted. So the government cannot garnish your bank accounts will an offer is under review.
The federal government is a terrible creditor for a person to have as they can garnish money out of your bank accounts. One way to solve this problem is with an Offer in Compromise but make sure you seek professional assistance if you want it to work.