IRS Settlement

Tax debt can be an overwhelming burden for individuals, but failure to pay or underpaying tax liability is not the answer. Failure to pay tax debt can lead to hefty penalties and interest charges. ...

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Federal income tax have the IRS on your back?

If you owe money on a past tax return to the Internal Revenue Service (the IRS), you have probably found that they are very persistent in hunting you down in an attempt to get their money.  The initial contact from the IRS may simply come in the form of letters and phone calls under the guise of being sure you are aware that you owe them back taxes related to your tax return.  However, as time passes and the IRS continues to either not hear from you at all or not receive the money you owe them, they will realize that the non-payment of the back taxes is not simply an oversight on your part.

As the IRS can in general seek to collect back taxes for up to 10 years from the date when you filed the tax return related to that money, it is very difficult to outlast the IRS.  Before the 10-year statute of limitations runs out, the IRS will generally file a levy against you to take your property, forcing collection of the back tax owed.

However, you do have options to keep the IRS from continuing to harass you.  Here are some solutions you should consider.

Pay the federal income tax you owe.  If you are looking for help with your tax return and back taxes you owe, then odds are that you simply cannot afford to pay the back tax that you owe on your tax return.  Regardless, this point is worth mentioning and evaluating fully to ensure this solution is not an option.

If you do not have the cash available to pay the tax you owe on your tax return, do you have any other assets or property—cars, boats, homes, jewelry, real estate—you could sell for enough money to cover the back tax?  If you do and you have not been willing to sell the property because it has sentimental or other important value to you, remember that selling other property you have may be a viable solution to get the IRS off your back.

Negotiate a settlement with the IRS.  The IRS has options available to help people pay back federal income tax they owe.  One of these options is a payment plan or settlement agreement, which means that you will pay all the tax you owe not as a single lump-sum payment but as a series of payments over time.  This means that you may be able to work out with the IRS a monthly payment you can afford to address the back taxes you owe.

A second option is an offer in compromise.  An offer in compromise is when the IRS agrees to accept less than the full amount of federal income tax you owe.  But before you assume this is the best option for you, simply because it means you will have to pay less money than you thought you would, keep in mind that the IRS does not enter into an offer in compromise with a taxpayer without a good reason.  For the IRS to accept an offer in compromise, they must believe that they are unlikely to ever receive the full payment, because you have no assets or income.  In addition, you must file every past due tax return you have not filed previously.

Declare bankruptcy.  Bankruptcy is an option for addressing money you owe on a past tax return in certain cases.  Specifically, if the back tax is related to the previous three tax years, an amount assessed by the Internal Revenue Service in the past 240 days, or an amount related to an income tax return you never filed, bankruptcy cannot be used to get rid of the back taxes.  This is true whether you use Chapter 7 or Chapter 13 bankruptcy, the two most common types of bankruptcies used by individuals.

Whatever your situation, before you decide one of the above options may be for you in addressing your federal income tax situation, it would be wise to speak with a tax attorney.

Can a tax attorney help me figure out what I should do?

Yes, a tax attorney will be able to help evaluate your back taxes and determine what options is best for your situation.  The tax attorney will have experience working with cases related to past due federal income tax–situations like yours–and will know what to do.

The initial conversation you have with a tax attorney will be free of charge, completely confidential, and not obligate you to anything further.  Therefore, please take this opportunity today to learn what options you have to address your back taxes and get the IRS off your back.

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Wyoming IRS Tax Settlement Options

The IRS offers a variety of IRS tax settlement options which may allow Wyoming taxpayers to repay their tax debt for a fraction of the full amount owed. The federal government has given the Internal Revenue Service (IRS) sole authority to determine how much money they are willing to accept to settle IRS tax debt. The IRS will only accept less than the full amount of tax owed if they do not believe the taxpayer can pay the IRS tax debt with a lump sum payment or an installment agreement.

Wyoming taxpayers who do not pay their federal tax debt can become the target of aggressive IRS collection actions and may face bank account levies, property repossession or wage garnishments. It is not a good idea to ignore the IRS. Wyoming taxpayers who want more information about how they can settle their IRS tax debt can contact a tax professional for help.

Offer in Compromise

Offer in Compromise is one of the most popular IRS tax settlement options available. Offer in Compromise may allow a taxpayer to make a settlement offer to the IRS to settle their IRS tax debt for a fraction of the full amount owed. The IRS can deny, accept or negotiate the Offer in Compromise offer. If the Offer in Compromise is accepted, the amount outlined in the OIC agreement will be considered settled. The IRS currently accepts approximate 20% of the OIC offers it receives (more may be accepted after negotiations or on appeal). Wyoming taxpayers will not have any legal recourse to compel the IRS to accept an OIC offer if all OIC appeals have been exhausted.

After the OIC is accepted penalties and interest will stop accruing and the IRS will stop their collection actions. An Offer in Compromise can be expensive, time consuming and difficult to implement. The IRS will also need large amounts of detailed information to process the OIC and if it is denied, they can use this information to continue to collect the tax debt. Offer in Compromise may allow the Wyoming taxpayer to settle their IRS tax debt for a fraction of the amount owed, but it may not be the best IRS tax settlement option for all Wyoming taxpayers.

Qualifying for Offer in Compromise

Not all Wyoming taxpayers who request an Offer in Compromise will be eligible for one. Taxpayers must meet one of the following:

  • Doubt as to Liability- An Offer in Compromise will be accepted if there is some doubt as to the amount of tax debt assessed against the taxpayer. Errors can result from a miscalculation, misapplication of federal tax law or if the taxpayer provides additional tax information which has not previously been considered.
  • Doubt as to Collectibility- Under this condition the amount of IRS tax debt is not in question, only the ability of the IRS to collect the debt. An OIC also may be granted under this condition if the IRS has determined it is too expensive to collect the tax debt.
  • Effective Tax Administration- Wyoming taxpayers who may suffer a hardship which is inequitable or unfair may receive an Offer in Compromise. This condition is most frequently used for the handicapped and the elderly.

The Wyoming taxpayer must also meet the following requirements:

  • Taxpayers must pay all IRS tax debt before the federal deadline for the next five years.
  • Taxpayers must make their Offer in Compromise payments.
  • Taxpayers must submit their federal tax forms and additional documentation to the IRS by the federal tax deadline.

Installment Agreement

Most taxpayers use installment agreements to repay their IRS tax debt. Installment agreements allow the Wyoming taxpayer to pay all of their IRS tax debt in monthly installment payments. Installment agreements will be for a specified time period which will vary based on the amount of tax which is owed.

Wyoming taxpayers who owe $25,000 or less can generally qualify for an installment agreement. Wyoming taxpayers who owe $25,000 or more should contact a tax professional (certified public accountant, tax attorney or enrolled agent) for help negotiating with the IRS.

Installment agreements will not stop penalties and interest from accruing on the outstanding tax debt, but will stop the IRS from continuing their collection actions. It is always less expensive to pay tax debt with a one time lump sum payment if possible. The IRS has the authority to cancel an installment agreement for many reasons including any of the following:

  • Wyoming taxpayers do not make their full installment payments or they pay less than the agreed upon amount. First time violators may be granted a 30-60 day grace period.
  • Wyoming taxpayers fail to file a federal tax return each year.
  • Wyoming taxpayer’s financial situation dramatically improves.
  • Wyoming taxpayers provide inaccurate financial information to the Internal Revenue Service on the installment agreement application.
  • Self-employed Wyoming taxpayers fail submit tax returns each quarter or pay quarterly tax payments.
  • Wyoming taxpayers did not make their federal tax payments for the five years before the tax debt which can not be paid.
  • Wyoming taxpayers have had another installment agreement within the last five years.

Partial Payment Installment Agreement

If a Wyoming taxpayer does not qualify for an Offer in Compromise or can not make the full installment payments with an installment agreement, they may be able to repay IRS tax debt with a partial payment installment agreement or PPIA. The PPIA is simple, less expensive and easier to use than an Offer in Compromise. The PPIA will stop all collection actions, but it will not stop penalties and interest from accruing on outstanding tax debt.

The PPIA, like the installment agreement, will allow the taxpayer to repay tax debt with monthly installment agreements, but unlike the installment agreement, the PPIA will allow the Wyoming taxpayer to make partial payments each month. The IRS must agree to the plan, and if they do, all the debt not included in the PPIA will be considered settled.

The PPIA will be reviewed by the IRS every 2 years and if the Wyoming taxpayer’s financial situation has substantially improved, the IRS may require the taxpayer to pay more each month or completely cancel the PPIA.

Currently Not Collectible

Certain Wyoming taxpayers may have outstanding IRS tax debt which they are not able to repay. If the IRS agrees, they may change the tax status to “currently not collectible”. This tax status will stop all collection actions against the taxpayer but will not stop penalties and interest from continuing to accrue.

The IRS will send written notification each year to the Wyoming taxpayer updating them on their tax status, but this notice is not considered a tax bill. The IRS has 10 years to collect all tax debt before the statute of limitations expires and the debt is forgiven.

Penalty Abatement

Wyoming taxpayers may be assessed tax penalties if they fail to file a tax return, do not pay their taxes, misrepresent their tax information or request a false refund. The IRS may, with a valid reason, be willing to abate or lower a Wyoming taxpayer’s penalties. Valid reasons might include: personal duress, poor physical or mental health or bad professional tax advice.

The IRS may not be willing to lower all penalties. Wyoming taxpayers who need more information about penalty abatement should contact a tax professional for help.

Negotiating An IRS Tax Settlement In South Dakota


The Internal Revenue Service or IRS as part of the Department of Treasury has the authority to collect federal taxes to fund the activities of the federal government. If taxpayers refuse to pay their taxes the IRS can compel them to pay with several aggressive collection methods including: repossessing business or property assets, freezing money in taxpayer’s accounts, garnishing wages or imprisonment.

South Dakota taxpayers who owe IRS tax debt may be able to stop these aggressive debt collection tactics by using an IRS tax settlement option. Under certain circumstances the IRS may be willing to negotiate a tax settlement if the IRS believes it will help South Dakota taxpayers meet their future tax obligations.

South Dakota taxpayers can contact a tax professional (enrolled agent, certified public accountant or tax attorney) who can provide information to them about their IRS tax settlement options.

Offer in Compromise

Offer in Compromise or OIC is one method South Carolina taxpayers can use to pay IRS tax debt. OIC will allow South Dakota taxpayers to offer a sum of money to settle all IRS tax debt. If the IRS accepts the offer, all penalties and interest will stop accumulating and the IRS will stop all tax collection actions. Offer in Compromise may allow South Dakota taxpayers to pay less than the full amount of tax owed.

The Internal Revenue Service does not accept all OIC offers. In fact, up to 80% of first time OIC offers may be rejected. The IRS may be willing to negotiate until an offer is found which is acceptable to both the federal government and the South Dakota taxpayer.

Offer in Compromise can be complicated, difficult to implement and expensive. The IRS will need detailed financial records to determine if they will accept the OIC. If they reject the OIC offer, they may be able to use the data they have gathered to continue debt collection. Offer in Compromise may be one way to settle tax debt for less than the full amount of money owed, but it may not be the best option for all South Dakota taxpayers.

Qualifying for Offer in Compromise

Not everyone who applies for an Offer in Compromise will qualify for one. Offer in Compromise will only be accepted if the South Dakota taxpayer meets one of the following:

  • Doubt as to Liability- If there is doubt as to the amount of tax debt owed the IRS may be willing to accept an Offer in Compromise. This does not occur often, but discrepancies can occur if the IRS makes a miscalculation or if they misinterpret tax law.
  • Doubt as to Collectibility- Under this condition the amount of tax debt is not in question, only the ability of the IRS to collect the debt. The IRS may also accept an OIC if they determine the cost of debt collection is too high.
  • Effective Tax Administration- If paying IRS tax debt causes a South Dakota taxpayer to suffer a hardship which is inequitable or unfair the IRS may accept an Offer in Compromise. This condition is mainly used for the handicapped or the elderly.

South Dakota taxpayers must also complete the following tasks:

  • South Dakota taxpayers must pay all of their future federal tax debt on time for the next 5 years.
  • South Dakota taxpayers must meet their Offer in Compromise requirements.
  • South Dakota taxpayers must submit their federal tax returns before the federal tax deadline.

Installment Agreement

The most common method used by taxpayers to repay tax debt is an installment agreement. Installment agreements allow the South Dakota taxpayer to pay their IRS tax debt in small manageable monthly installment payments. Generally it is not too difficult for taxpayers to qualify for an installment agreement if they owe $25,000 or less in IRS tax debt. South Dakota taxpayers who owe more than $25,000 in tax debt should contact a tax professional for help negotiating with the IRS.

Installment agreements will not stop penalties and interest from accruing, but they will stop the IRS from collecting the tax debt. It will always be less expensive for South Dakota taxpayers to pay all tax debt with a lump sum payment and avoid an installment agreement.

The Internal Revenue Service can revoke or refuse the installment agreement if the South Dakota taxpayer:

  • Fails to file all future tax returns or pay their federal tax obligations after the installment agreement is accepted
  • If their financial status substantially improves. The IRS may review the installment agreement every two years.
  • Fails to make all of the required installment agreement payments or makes only partial payments. The IRS may give first time violators 30-60 days before the installment agreement is revoked.
  • Reports false financial information on the installment agreement application.
  • Fails to pay their tax debt for the five years before the tax liability which can not be paid.
  • If they have had another installment agreement with the IRS in the last 5 years.
  • Fails to complete all past federal tax returns for all past tax liability.
  • If a self-employed South Dakota worker fails to file quarterly tax returns or make quarterly tax payments.

Partial Payment Installment Agreement

If a South Dakota taxpayer can not qualify for an OIC or if they can not make their full tax payments with an installment agreement, they may qualify for a partial payment installment agreement (PPIA). PPIA is similar to an installment agreement and will allow the taxpayer to make monthly installments, but a PPIA allows the South Dakota taxpayer to make partial payments. If the debt is not included in the PPIA it will be forgiven.

PPIA can be less expensive and less time consuming than an Offer in Compromise. PPIA will not stop penalties and interest from continuing to accumulate, but it will stop all IRS debt collection efforts. PPIA will always cost the taxpayer more money than repaying the IRS tax debt with a one time lump sum payment.  The IRS will review the PPIA every two years, and if the South Dakota taxpayer’s financial position has substantially improved, the IRS has the right to increase the PPIA payments or terminate the PPIA plan.

Currently Not Collectible

South Dakota taxpayers who absolutely can not pay their tax debt may have the debt declared “currently not collectible”. Under this status change the IRS will cease all collection actions. Penalties and interest will, however, continue to accumulate.

The IRS will send a written letter every year to the South Dakota taxpayer outlining the amount of IRS tax debt owed. This statement is not considered a tax bill. If the IRS fails to collect the tax debt within 10 years the statute of limitations will expire, and the IRS tax debt will be forgiven.

Penalty Abatement

The IRS may assess penalties against a South Dakota taxpayer if they do not file their tax return, fail to pay their IRS taxes, file a false refund or misrepresent their financial status. If the South Dakota taxpayer has a valid reason for their mistake and can prove a willingness to repay their tax debt, the IRS may be willing to lower or abate the tax penalties. Valid reasons for mistakes could include: a serious mental or physical health condition, a personal hardship which made it difficult to file a tax return, personal duress, a natural disaster or bad tax advice from a tax professional

Hawaii IRS Tax Settlement Options

Hawaiian taxpayers can use a variety of Internal Revenue Service tax settlement options to repay their outstanding tax debt. Some tax settlement options will allow the taxpayer to pay much less than the full amount of money owed. The IRS wants to help taxpayers meet their tax obligations and will often accept an IRS tax settlement offer if it will help taxpayers pay all of their future tax obligations.

The IRS has been given the authority from the federal government to collect outstanding IRS tax debt. The IRS also has the ability to use very aggressive collection tactics such as wage garnishment, bank account levies and property repossession if Hawaiian taxpayers fail to pay their tax debt. All Hawaiian taxpayers who have outstanding tax debt will want to discuss the IRS tax settlement options with a tax professional.

Offer in Compromise

Although Offer in Compromise (OIC) is one of the most common settlement options it also can be one of the most difficult to qualify for. An OIC allows the Hawaiian taxpayer to make an offer to the IRS and if the IRS accepts the offer, the taxpayer may be able to settle IRS tax debt for a fraction of the total amount of tax debt owed. To qualify for an OIC, the Hawaiian taxpayer must meet stringent OIC requirements and convince the IRS that the amount of their offer is greater than or equal to the total amount tax the IRS could collect through aggressive collection actions.

The IRS will not accept all OIC offers and if they deny an offer, the IRS can use the detailed information they have gathered to continue collections. Penalties and interest will continue to collect on all outstanding IRS tax debt until the OIC is accepted. All Hawaiian taxpayers who are considering Offer in Compromise should contact a tax professional for more information.

Qualifying for Offer in Compromise

Hawaiian taxpayers must meet one of the following requirements to qualify for Offer in Compromise:

  • Doubt as to Liability- There must be a legitimate question about the amount of tax debt owed by Hawaiian taxpayers for the IRS to grant an OIC under this condition. This condition is not frequently met.
  • Doubt as to Collectibility- The amount of tax debt is not in question only the ability of the IRS to collect the federal taxes before the statutory period of time expires.
  • Effective Tax Administration- Hawaiian taxpayers who can not pay their federal tax debt with out suffering a hardship which would be inequitable or unreasonable may qualify for an Offer in Compromise. This condition is most frequently used for handicapped or elderly individuals.

The following tasks must also be completed by Hawaiian taxpayers:

  • Hawaiian taxpayers must pay all federal tax debt on or before the federal deadline for the next five years.
  • Hawaiian taxpayers must meet all of the requirements outlined in the Offer in Compromise.
  • Hawaiian taxpayers must complete and submit all federal tax returns to the IRS by the federal tax deadline.

Installment Agreements

Installment agreements are the most common type of IRS tax settlement option. An installment agreement allows the Hawaiian taxpayer to pay their back taxes in monthly installment payments. The taxpayer will be required to pay all their tax debt in a specific time period which can vary based on the total amount of outstanding tax debt owed.

The IRS will generally accept an installment agreement if the taxpayers owes $25,000 or less. If the Hawaiian taxpayer owes more than $25,000 they will want to consult with a tax professional who can help negotiate an installment agreement. Penalties and interest will continue to accrue until the full amount of tax debt is paid. It is always less costly to make a lump sum payment for the full amount of IRS tax debt.

The IRS has the authority to deny or cancel an installment agreement if any of the following occurs:

  • If the Hawaiian taxpayer does not pay their monthly installment payments or pays less than the full amount due. First time violators may be given a thirty to sixty day grace period.
  • If the Hawaiian taxpayer fails to submit their federal tax returns each year.
  • The financial status of the Hawaiian taxpayer substantially improves.
  • The Hawaiian taxpayer provides incorrect financial data to the IRS when applying for the installment agreement.
  • Hawaiian taxpayers who are self-employed must file federal tax returns each quarter and make their quarterly tax payments.
  • If the Hawaiian taxpayer does not pay all of their tax debt for the five years before the IRS debt which can not be paid.
  • If the Hawaiian taxpayers has had another installment agreement within the last 5 years.

Partial Payment Installment Agreement

Hawaiian taxpayers who are unable to make the minimum payment with an installment agreement may qualify for a partial payment installment agreement or PPIA. The PPIA will allow the Hawaiian taxpayer to pay less than the full amount owed to the IRS for a specific time period. The PPIA can be less expensive, time consuming and less complicated than an Offer in Compromise.

Unfortunately, interest and penalties will continue to collect on the outstanding tax debt until the debt is completely paid. The IRS will cease collection actions under a PPIA but will review the financial status of the taxpayer every 2 years to determine if the PPIA can be modified for cancelled.

Currently Not Collectible

The IRS may decide that some debt can not be collected. If the IRS makes this determination about a Hawaiian taxpayer’s IRS tax debt the status will be changed to currently not collectible. If a taxpayer’s debt is determined currently not collectible, the Internal Revenue Service will stop all collections against the taxpayer.  If the IRS can not collect the debt within ten years the debt will be forgiven.

Interest and penalties will continue to accumulate on the outstanding tax debt even under the currently not collectible status. The Internal Revenue Service will send written notification each year to the Hawaiian taxpayer outlining the amount of taxes owed. This notice is not considered a tax bill.

Penalty Abatement

Penalty abatement allows the IRS to eliminate part or all of the penalties assessed against taxpayers. The IRS assesses penalties for a variety of reasons including: failing to file a federal tax return, providing inaccurate tax information or requesting a false refund.

The IRS will, under certain conditions, abate or lower penalties against Hawaiian taxpayers. Valid reasons might include: receiving incorrect advice from a tax professional, or failing mental or physical health. The may be certain penalties which the IRS will not lower or abate.

Montana IRS Tax Settlement Options

Montana taxpayers now have a variety of IRS tax settlement options they can use to settle federal tax debt. Many available options will allow Montana taxpayers to pay a fraction of the total amount owed. The Internal Revenue Service (IRS) may accept an IRS tax settlement to help Montana taxpayers meet their tax obligations and help the IRS avoid an extended installment agreement or avoid declaring debt as currently not collectible.

The federal government has given the IRS the authority to collect federal tax debt and if necessary to use very aggressive tax collection actions (wage garnishment, repossession, bank levies, imprisonment) against the taxpayer. Montana residents who have become the target of these actions may want to consult with a tax professional to discuss their IRS tax settlement options.

Offer in Compromise

One of the most common types of IRS tax settlement options is Offer in Compromise or OIC. Offer in Compromise allows the Montana taxpayer to make an offer to the IRS. If the IRS accepts this offer it is considered a “compromise” and all the taxes outlined in the OIC agreement will be settled after the Montana taxpayer meets the requirements of the agreement. The IRS has sole discretion to reject or accept Offer in Compromise offers.

The IRS will accept approximate 25% of first time OIC offers but may be willing to accept more after negotiations or a formal appeal.  Penalties and interest will continue to accrue while the IRS is considering the OIC, but if the OIC is accepted, collection efforts will cease.

Offer in Compromise can be expensive, time consuming and difficult to implement. The Offer in Compromise application process will require Montana taxpayers to send detailed financial information to the IRS which they can use to continue collections if the Offer in Compromise is denied. Offer in Compromise is one of several IRS tax settlement options available to Montana taxpayers and it may not always be the best.

Qualifying for Offer in Compromise

Montana residents will only qualify for Offer in Compromise if they meet one of the following criteria:

  • Doubt as to Liability- The IRS must believe the amount of IRS tax debt assessed could be incorrect. This could be due to a miscalculation or if additional tax information is provided. This condition does not frequently occur.
  • Doubt as to Collectibility- The IRS may grant an Offer in Compromise if they believe they will not be able to collect the IRS tax debt either now or in the future.
  • Effective Tax Administration- Montana taxpayers who can not pay their IRS tax debt because doing so would cause a “hardship which is inequitable or unfair” may receive an Offer in Compromise. The handicapped and elderly most frequently qualify under this condition.

The following tasks must also be completed by Montana taxpayers:

  • All IRS tax debt must be paid on or before the federal deadline for the next 5 years.
  • All of the requirements outlined in the OIC must be completed.
  • All federal tax returns must be completed and submitted to the IRS by the federal tax deadline.

Installment Agreement

Montana taxpayers who do not want to apply for an OIC or who may not qualify may be able to use an installment agreement to pay IRS debt. The installment agreement will require the full amount of tax debt to be paid, but payments can be extended over a set period of time. The IRS generally accepts installment agreements for taxpayers owing $25,000 or less as long as the debt is repaid within 60 months.

Montana taxpayers who owe more than $25,000 should contact a tax professional for help negotiating an installment agreement. The installment agreement will not stop the penalties or interest from accumulating, but it will stop the aggressive collection efforts. It is always less expensive to make one lump sum payment for tax debt. The IRS has the authority to deny or cancel an installment agreement if any of the following occurs:

  • Fails to pay their monthly installment payment.
  • Fails to submit their federal tax returns each year.
  • Fails to pay the full amount of the tax payment due each month. First time violators may be granted a 30-60 day grace period.
  • The financial status of the Montana taxpayer improves drastically
  • The Montana taxpayer provides incorrect financial information to the Internal Revenue Service on the installment agreement application.
  • Montana taxpayers who are self-employed fail to file federal tax returns each quarter or make their quarterly tax payments.
  • Montana taxpayers fail to pay all of their federal tax debt for the five years before the IRS debt which can not be paid.
  • Montana taxpayers have had another installment agreement within the last five years.

Partial Payment Installment Agreement

Montana taxpayers also may be able to settle their IRS tax debt with a partial payment installment agreement or PPIA. The PPIA can be much simpler and less expensive to implement than the OIC, but it may allow Montana taxpayers to pay only part of the tax debt owed. Unlike the installment agreement, the PPIA will allow Montana taxpayers to make partial monthly installment payments. All taxes which are not paid may be forgiven.

Penalties and interest will continue to accrue, but the IRS will cease all debt collection actions against the Montana taxpayer. The Internal Revenue Service will review the partial payment installment agreement every 2 years to determine if the Montana taxpayer’s financial condition has improved, if it has, the IRS may decide to modify or terminate the plan.

Currently Not Collectible

Under certain conditions the IRS may determine the Montana taxpayer’s debt is not collectible and they will change the tax status to “currently not collectible”. Under this status, the IRS will cease all collection actions against the Montana taxpayer. Interest and penalties will continue to collect on the outstanding tax debt.

The IRS will send a letter each year detailing the amount of outstanding tax debt the Montana taxpayer owes, but this letter is not considered a tax bill. The IRS has ten years to collect all tax debt. If the IRS fails to collect the tax debt within this time period the statute of limitations on the debt will expire and the debt will be forgiven.

Penalty Abatement

Penalties may be assessed against Montana taxpayers for a variety of tax reporting infractions including: failure to file a federal tax return, misrepresenting financial information either accidently or intentionally, or requesting a false refund. The IRS may be willing to abate or lower the penalties if the Montana taxpayer has a valid reason for the mistake such as: personal duress, incorrect professional tax advice, poor physical or mental health or a natural disaster occurred. The IRS may not be willing to abate all penalties.

IRS Tax Settlement Options For New Hampshire Taxpayers

New Hampshire taxpayers who have outstanding IRS tax debt may be able to settle their debt for a fraction of the full amount owed by using an IRS tax settlement option. The Internal Revenue Service or IRS has the ability not only to collect federal tax debt, but to use a variety of very aggressive debt collection tools against New Hampshire taxpayers. Collection methods can include: wage garnishment, property repossession and bank account levies.

All New Hampshire taxpayers who have become the target of aggressive tax collection efforts or who have outstanding tax debt can contact a tax professional for help.

Offer in Compromise

Offer in Compromise or OIC is one of the most popular tax settlement options used by taxpayers. OIC allows New Hampshire taxpayers to make an offer to the Internal Revenue Service to settle their federal tax debt. The IRS can either accept or reject the offer. If the IRS accepts the Offer in Compromise and the taxpayer meets all of the requirements, the tax outlined in the OIC will be considered settled.

Currently the IRS accepts approximately 20% of first time OIC offers but more may be accepted after negotiations or on appeal. New Hampshire taxpayers whose OIC is denied will not have any legal authority to pursue legal action against the IRS. The IRS has the sole authority to accept or deny all OIC offers.

Offer in Compromise, if accepted, will stop all IRS collection actions against the taxpayer and stop penalties and interest from accruing. Offer in Compromise can be difficult and time consuming. The IRS will need detailed financial information from the New Hampshire taxpayer. If the OIC is denied, this information can be used by the IRS to continue their debt collection efforts. New Hampshire taxpayers who are considering Offer in Compromise should contact a tax professional to determine if OIC is the best option for them to settle their IRS tax debt.

Qualifying for Offer in Compromise

The IRS will not accept all OIC offers. To qualify for an Offer in Compromise, New Hampshire taxpayers must meet one of the following conditions:

  • Doubt as to Liability- If there is some question about the amount of tax liability which has been assessed against the taxpayer the IRS may accept an Offer in Compromise. Doubt as to liability can occur if the IRS administrator misapplied the tax laws, made an error in calculation or if the taxpayer has produced additional tax information. This condition is not frequently met.
  • Doubt as to Collectibility- Under this condition the amount of tax debt is not in question only the ability of the IRS to collect the debt before the statutory period ends for collection. The IRS also may accept an OIC under this condition if they believe the cost to collect the tax debt may be too high.
  • Effective Tax Administration- The IRS may accept an OIC if they believe New Hampshire taxpayers who pay their federal tax debt may experience a hardship which is inequitable or unfair. The elderly and handicapped frequently qualify under this condition.

New Hampshire taxpayers must also complete the following:

  • New Hampshire taxpayers must pay their federal taxes before the federal tax deadline for the next 5 years.
  • New Hampshire taxpayers must meet all of the agreed upon requirements outlined in the OIC.
  • New Hampshire taxpayers must submit their federal tax returns on or before the federal tax deadline.

Installment Agreement

Installment agreements are the most popular tax settlement option used by taxpayers. The installment agreement allows New Hampshire taxpayers to pay all of their tax debt in monthly installment payments. The time allowed to pay the IRS tax debt will vary based on the amount of debt the taxpayer owes.

New Hampshire taxpayers who owe $25,000 or less can either contact a tax professional or the IRS directly to discuss their payment options. Taxpayers who owe more than $25,000 should contact a tax professional who can help them negotiate the installment agreement. Penalties and interest will continue to accrue until the full amount of the tax debt is paid, but collection efforts will cease after the IRS accepts the installment agreement. It will always be less expensive for New Hampshire taxpayers to pay all of their tax debt in one lump sum payment and avoid an installment agreement if possible.

The Internal Revenue Service can terminate an Installment agreement for a variety of reasons including:

  • The taxpayer fails to make the full installment agreement payment each month. First time violators may be granted a 30-60 day grace period.
  • Federal tax returns are not submitted each year by the federal tax deadline.
  • A New Hampshire taxpayer’s financial condition substantially improves.
  • The taxpayer provides false or incorrect information to the IRS on the installment agreement application.
  • Self-employed New Hampshire taxpayers fail to submit their federal tax returns each quarter or fail to make their estimated tax payments.
  • Taxpayers fail to pay all of their IRS tax payments for the 5 years before the Internal Revenue Service tax debt which can not be paid.
  • Taxpayers have had another installment agreement within the last five years.

Partial Payment Installment Agreement

New Hampshire taxpayers who do not meet the requirements of OIC or who can not make the monthly payments for the installment agreement may be able to qualify for a partial payment installment agreement (PPIA). PPIA allows taxpayers to pay only part of the tax debt in partial monthly installment payments. The IRS will forgive the tax debt which is not outlined in the PPIA.

Interest and penalties will continue to accrue until all the tax debt is paid under the PPIA, but the IRS will stop their debt collection efforts against New Hampshire taxpayers. Every two years the IRS will review the financial condition of the New Hampshire taxpayer to determine if their finances have substantially improved. If they have, the IRS has the authority to increase the PPIA tax payments amount or to cancel the PPIA.

Currently Not Collectible

If the IRS determines a New Hampshire taxpayer can not pay their IRS tax debt either through an installment agreement or another IRS tax settlement option, they may change the tax status to currently not collectible.

If the IRS determines a taxpayer’s debt is currently not collectible they will cease all collection actions against the taxpayer. Penalties and interest will continue to accumulate on all outstanding tax debt. The IRS will send a letter to the New Hampshire taxpayer each year outlining the amount of outstanding tax debt. This letter is not considered a tax bill. The IRS has 10 years to collect the debt or the statute of limitations will expire and the debt will be forgiven.

Penalty Abatement

The IRS will charge New Hampshire taxpayers penalties for a variety of tax violations including: filing a late tax return, failing to file a return, submitting false tax information or requesting a false refund. There may be valid reasons for violating a tax law and if the New Hampshire taxpayer can prove they have a valid reason, the IRS may be willing to abate or lower their tax penalties. New Hampshire taxpayers who have had penalties assessed against them can contact a tax professional such as an enrolled agent, tax attorney or certified public accountant for help.

IRS Tax Settlement Options For Kentucky Taxpayers

Kentucky taxpayers who want to settle IRS tax debt may be able to use an IRS tax settlement option. The United States federal government has given the Internal Revenue Service (IRS) the legal authority to collect federal taxes for a fraction of the full amount owed.

Kentucky taxpayers who fail to pay IRS tax debt may face wage garnishments, repossessions or bank account levies. IRS tax settlement options may allow a taxpayer to repay their debt and avoid debt collection. The Internal Revenue Service may be willing to negotiate with a Kentucky taxpayer to avoid declaring debt currently not collectible or agreeing to a protracted installment agreement.

Kentucky taxpayers who need information about IRS tax settlement options can contact a tax professional such as an enrolled agent, certified public accountant or tax attorney.

Offer in Compromise

Offer in Compromise is one type of IRS tax settlement option available for Kentucky taxpayers. Kentucky taxpayers can make an “offer” to the Internal Revenue Service to settle their IRS tax debt. If the Internal Revenue Service agrees to the compromise amount and all of the requirements of the Offer in Compromise are met, the federal tax debt will be considered settled. Under certain conditions, the Internal Revenue Service may be willing to accept less than the total amount of federal tax owed.

Approximately 80% of first time Offer in Compromises are declined by the Internal Revenue Service. The IRS may be willing to continue negotiations with Kentucky taxpayers to find an amount which is agreeable to the federal government and the taxpayer. Offer in Compromise can be time consuming, expensive and complicated. The IRS will request a substantial amount of financial data to process the Offer in Compromise agreement and if the OIC is denied, the Internal Revenue Service can use this information to continue their debt collection efforts.

Qualifying for Offer in Compromise

Not all Kentucky taxpayers with IRS tax debt will be able to qualify for an Offer in Compromise. Offer in Compromise may be accepted by the Internal Revenue Service for the following reasons:

  • Doubt as to Liability- Kentucky residents may have questions about the amount of tax liability they have been assessed. If the IRS agrees, they may be willing to grant an Offer in Compromise. This condition is not frequently met.
  • Doubt as to Collectibility- The Internal Revenue Service may accept an Offer in Compromise if they believe they will not be able to collect federal tax debt. This is not the same as the first condition in that the amount of tax debt owed is not in question, only the ability of the IRS to collect the tax debt.
  • Effective Tax Administration- Kentucky taxpayers who believe they will experience “an economic hardship which is unfair and inequitable” if they pay their IRS tax debt may qualify for an Offer in Compromise. This condition is most frequently met for the elderly and the handicapped.

Kentucky taxpayers applying for an OIC must also complete the following:

  • Kentucky taxpayers will have to pay all of their future IRS tax debt on or before the federal tax deadline for the next 5 years.
  • All the Offer in Compromise requirements must be completed by the Kentucky taxpayer.
  • Kentucky taxpayers must fill out and complete all of their Internal Revenue Service tax returns by the federal tax deadline.

Installment Agreement

The most popular method used by taxpayers to settle IRS tax debt is the installment agreement. With an Installment Agreement or IA the IRS can make monthly installment payments to repay federal tax debt. Kentucky taxpayers with tax debt of $25,000 or less can generally get an installment agreement and repay their debt over 60 months. Kentucky taxpayers who owe more than $25,000 should talk to a tax professional that has the expertise to negotiate the best installment agreement possible. Penalties and interest will accrue for the entire duration of the installment agreement. Paying all federal tax debt in one lump sum is always less expensive than an installment agreement.

The Internal Revenue Service can revoke an installment agreement for any of the following reasons:

  • If the Kentucky taxpayer fails to pay the monthly tax payments or file tax returns.
  • If the Kentucky taxpayer pays less than the agreed upon monthly payment amount.  First time violators may be granted a 30-60 day grace period.
  • If a Kentucky taxpayer’s financial condition improves.
  • If a Kentucky taxpayer provides false or inaccurate tax information to the IRS during the installment agreement application process.

Kentucky taxpayers who are considering an installment agreement must meet the following requirements:

  • All self-employed Kentucky taxpayers must file quarterly IRS tax returns and make quarterly estimated federal tax payments.
  • Kentucky taxpayers must submit all federal tax returns.
  • Kentucky taxpayers must pay their IRS tax debt for the 5 years before the tax liability which can not be paid.
  • Kentucky taxpayers can not have made another installment agreement with the Internal Revenue Service with in the last 5 years.
  • The IRS will perform a review of the Kentucky taxpayer’s financial situation every two years.

Partial Payment Installment Agreement

Kentucky taxpayers who do not qualify for an Offer in Compromise or who can not pay their full amount of tax debt may be able use a partial payment installment agreement or PPIA. Partial payment installment agreements differ from an installment agreement by allowing the Kentucky taxpayer to repay their tax debt with partial monthly payments. Any debt which is not paid will be forgiven by the IRS.

Partial payment installment agreements can be less complicated, less expensive and less time consuming that an OIC agreement. Penalties and interest will continue to accrue during the PPIA period, but the IRS will stop their collection actions such as wage garnishments and bank account levies. The partial payment installment agreement will be reviewed by the Internal Revenue Service every two years and if the Kentucky taxpayer’s financial situation improves the PPIA payments may be increased or the plan may be terminated. It is always more cost effective to pay all IRS tax debt with one lump sum payment.

Currently Not Collectible

Tax debt not paid by the Kentucky taxpayer may be determined “currently not collectible”. Currently not collectible will stop all Internal Revenue Service collection tactics such as tax levies and wage garnishments. Notice will be sent each year to the Kentucky taxpayer outlining tax debt owed. This notice is not considered a tax bill. The expiration for the Internal Revenue Service to try and collect the tax debt is ten years.

Penalty Abatement

The Internal Revenue Service may assess the Kentucky taxpayer penalties for a variety of tax infractions including but not limited to: failure to file a federal tax return, requesting a false refund or reporting inaccurate tax data. The Internal Revenue Service may be willing to abate or reduce a tax penalty if the Kentucky taxpayer can provide a valid reason for the abatement. Valid reasons may include: personal duress, environmental disasters, inaccurate tax professional filings or failing physical health. The Internal Revenue Service may not be willing to dismiss or lower all penalties.

Vermont IRS Tax Settlement Options

The Internal Revenue Service or IRS has developed several IRS tax settlement options which Vermont taxpayers can use to repay their outstanding IRS tax debt. Several of these tax settlement options may allow the Vermont taxpayer to settle their IRS debt for a fraction of the full amount of tax owed.

Vermont taxpayers who have not paid their IRS tax debt could face aggressive IRS collection actions such as wage garnishments, property repossession or bank account levies. IRS tax settlement options may allow the taxpayer to stop or avoid these actions and meet their tax obligations. Vermont taxpayers who are considering an IRS tax settlement option should contact a tax professional (tax attorney, enrolled agent, certified public accountant) for help.

Offer in Compromise

Offer in Compromise is one of the most popular IRS tax settlement options available. Offer in Compromise can be complicated, expensive and difficult to implement, but it can allow the Vermont taxpayer to settle tax debt at a fraction of the amount owed. Offer in Compromise allows the taxpayer to make a settlement offer to the Internal Revenue Service. The IRS has sole authority to accept or reject the offer. The IRS will only accept the OIC offer if the Vermont taxpayer meets certain requirements and the IRS has determined the taxpayer is unable to repay their tax debt with a lump sum payment or with an installment agreement.

If the OIC is accepted, the tax debt outlined in the OIC agreement will be considered settled, penalties and interest will stop accruing and tax collection efforts will cease. Unfortunately if the OIC is denied, the detailed financial records the IRS has collected can be used to continue collection actions against the Vermont taxpayer.

The IRS denies up to 80% of first time OIC offers, but negotiations may be allowed to find a compromise settlement offer which the government and the Vermont taxpayer can both accept. If negotiations are not allowed, the Vermont taxpayer can file a formal appeal within 30 days from the date of the OIC denial letter.

Qualifying for Offer in Compromise

The IRS will not accept all Vermont taxpayer’s OIC offers. The Vermont taxpayer’s debt must meet one of the following conditions:

  • Doubt as to Liability- The Offer in Compromise may be accepted if the IRS believes the amount of tax debt which has been charged against the taxpayer may be inaccurate. Errors in tax debt are rare, but could occur if there has been a miscalculation, misapplication of tax law or if the Vermont taxpayer has new tax information which the IRS has not considered.
  • Doubt as to Collectibility- Under this condition the amount of federal tax debt which was charged is not in question, only the ability of the IRS to collect the tax debt. This condition may also be used if the IRS has determined it is too expensive to collect the IRS tax debt.
  • Effective Tax Administration- In some cases, payment of IRS tax debt may cause a hardship which is inequitable or unfair. Under these conditions, the IRS may be willing to accept an Offer in Compromise. This condition is used most often for the handicapped or elderly.

Vermont taxpayers must also complete the following Offer in Compromise tasks:

  • All federal tax debt must be paid to the IRS by the federal tax deadline for the next five years.
  • All Offer in Compromise payments must be paid by Vermont taxpayers.
  • All Offer in Compromise forms and information must be sent to the Internal Revenue Service.

Installment Agreement

Most taxpayers who owe federal tax debt use an installment agreement to repay their debt. Unlike the Offer in Compromise, the installment agreement will require all IRS tax debt to be repaid, but it can be less complicated, time consuming and expensive to implement. The installment agreement will also allow the Vermont taxpayer to make monthly installment payments instead of having to make a lump sum payment. The IRS has established criteria to determine the amount of time allowed to repay the IRS tax debt.

Vermont taxpayers who owe $25,000 or less can generally qualify for an installment agreement. Vermont taxpayers who owe $25,000 or more should contact a tax professional to discuss the best options for repayment. Penalties and interest will continue to collect during the installment agreement, but collection actions will cease. If a taxpayer wants to save money, it is better to avoid an installment agreement and make a one time lump sum payment.

The Internal Revenue Service can cancel an installment agreement for any of the following reasons:

  • The Vermont taxpayer fails to make an installment payment or pays less than the full payment amount. The IRS may be willing to grant a grace period of 30-60 days for first time offenders.
  • The Vermont taxpayer does not file a federal tax return each year.
  • The Vermont taxpayer’s finances substantially improve.
  • The Vermont taxpayer misrepresents their financial information on the installment agreement application.
  • Self-employed Vermont taxpayers fail to file quarterly federal tax returns or to pay their quarterly federal tax payments.
  • The Vermont taxpayer does not pay their federal taxes for the five years before the IRS tax debt which can not be paid.
  • The Vermont taxpayer has had another installment agreement within the last five years.

Partial Payment Installment Agreement

Vermont taxpayers who do not want to use an Offer in Compromise or who can not make full tax payments with an installment agreement may be able to qualify for a partial payment installment agreement or PPIA. Like the installment agreement, the PPIA will allow the taxpayer to make monthly installment payments, but unlike an installment agreement, the PPIA allows partial payments. The debt not outlined in the PPIA will be forgiven.

PPIA will not stop interest and penalties from accruing on all outstanding IRS tax debt, but it will stop the IRS from trying to collect the tax debt. Every two years the IRS will review the Vermont taxpayer’s PPIA to determine if it is still needed or if the taxpayer’s finances have improved enough to cancel or restructure the PPIA.

Currently Not Collectible

Some Vermont taxpayers may not be able to make any size tax payments or use an IRS tax settlement option to settle their federal tax debt. If the IRS decides to change a taxpayer’s tax status to currently not collectible, they will cease all collection actions against the taxpayer. Unfortunately, penalties and interest will continue to accrue on all outstanding tax debt.

Every year the IRS will send written notice to the Vermont taxpayer outlining the amount of tax debt which is owed. The letter is not considered a tax bill. The IRS has ten years to try to collect the tax debt before the statute of limitations will expire and the debt will be forgiven.

Penalty Abatement

If a Vermont taxpayer has been fined penalties for a tax infraction such as failing to file a federal tax return, claiming a false refund or filing false financial information on a tax return, the IRS may be willing to lower or abate the penalties if a valid reason for the infraction is provided. Penalty abatement will be at the sole discretion of the IRS, but valid reasons could include: personal duress, incorrect professional tax advice or failing mental or physical health. The IRS may not be willing to lower all penalties. Vermont taxpayers who have penalties should contact a tax professional for help.

Settle Your IRS Tax Debt In The District of Columbia

The Internal Revenue Service or IRS has the authority not only to collect federal taxes to fund the federal government but to determine if they are willing to accept less than the full amount of taxes owed with an IRS tax settlement option. The IRS may be willing to accept much less than the full amount of tax debt if they do not believe a District of Columbia taxpayer will be able to repay their tax debt in one lump sum or with an installment agreement.

All District of Columbia taxpayers who have become the target of aggressive IRS debt collection actions such as wage garnishments, property repossession or bank account levies can contact a tax professional who can answer questions about IRS tax settlement options.

Offer in Compromise

Offer in Compromise or OIC is one of the most popular IRS tax settlement options available to District of Columbia taxpayers. Taxpayers can make an offer to the IRS which if accepted, will settle all of the tax debt outlined in the Offer in Compromise agreement. The OIC once accepted will stop penalties and interest from accruing and stop all collection actions.

Most Offer in Compromise offers will not be accepted, but the IRS may be willing to negotiate with District of Columbia taxpayers to find an offer which is acceptable to both parties. Offer in Compromise can be expensive and difficult to implement. An OIC will require detailed information to be sent to the IRS and if the OIC is not accepted, the IRS may use this information to continue their collection efforts. There are several IRS tax settlement options available and Offer in Compromise may not be the best option.

Qualifying for Offer in Compromise

Not all District of Columbia taxpayers will be eligible for Offer in Compromise. The Internal Revenue Service will only accept an OIC if the taxpayer meets one of the following conditions:

  • Doubt as to Liability- If the accuracy of the tax debt is in question, the IRS may be willing to accept an Offer in Compromise. This condition does not frequently occur, but it is possible if there was a miscalculation or a misapplication of tax law.
  • Doubt as to Collectibility- This condition differs from the first; the amount of debt owed is not in doubt, only the ability of the IRS to collect the tax debt.
  • Effective Tax Administration- If the Internal Revenue Service determines a District of Columbia taxpayer may suffer an economic hardship which is inequitable or unfair by paying their IRS tax debt, the IRS may be willing to accept an Offer in Compromise. The elderly and the handicapped most frequently qualify for an OIC under this condition.

The following tasks must also be completed the taxpayer:

  • All IRS tax debt must be paid by the federal tax deadline for the next five years.
  • The District of Columbia taxpayer must meet their Offer in Compromise requirements.
  • All IRS tax forms and tax returns must be completed and sent to the IRS by the federal tax deadline.

Installment Agreement

Installment agreements are another popular IRS tax settlement option for District of Columbia taxpayers to use to repay their IRS tax debt. An installment plan can be less expensive and time consuming than an Offer in Compromise. Installment agreements will require the taxpayer to pay all of their tax debt, but taxpayers will be able to repay the debt in monthly installment payments instead making a one time lump sum payment.

For District of Columbia taxpayers with IRS tax debt of $25,000 or less, the IRS will generally accept an installment agreement. The repayment period will vary depending on the amount of debt which must be repaid. District of Columbia taxpayers who owe more than $25,000 should contact a tax professional such as an enrolled agent, tax attorney or certified public accountant to discuss the best repayment options.

Installment agreements will stop IRS collectors from harassing taxpayers, but penalties and interest will continue to accumulate. District of Columbia taxpayers who want to save money should always pay their tax payments in one lump sum payment and avoid an installment agreement.

The IRS can revoke an installment agreement (IA) for any of the following reasons:

  • If the District of Columbia taxpayer fails to make their monthly tax payments or if they pay less than the amount outlined in the installment agreement. The IRS may give first time violators 30-60 days to make payments.
  • If the District of Columbia taxpayer does not file their federal tax returns.
  • If the District of Columbia taxpayer provides false or inaccurate financial information to the Internal Revenue Service on the installment agreement application.

District of Columbia taxpayers also must complete the following:

  • All self-employed District of Columbia taxpayers must file quarterly federal tax returns and make quarterly federal tax payments.
  • All federal tax returns must be filed each year.
  • District of Columbia taxpayers must pay their IRS tax debt for the five years before the tax liability which can not be paid.
  • District of Columbia taxpayers can not have had another installment agreement with the IRS within the last 5 years.
  • The IRS will review the District of Columbia taxpayer’s financial situation every two years.

Partial Payment Installment Agreement

There will be some District of Columbia taxpayers who do not qualify for an Offer in Compromise and can not pay the full amount of their tax debt with an installment agreement; these taxpayers may qualify for a partial payment installment agreement (PPIA).

The PPIA will allow the taxpayer to make partial installment payments. All IRS tax debt not included in the PPIA will be forgiven by the IRS. The PPIA will not stop penalties and interest from accruing, but the IRS will stop their collection actions (wage garnishments, repossession, bank account levies). Another benefit of the PPIA is that it can be less expensive, less time consuming and less complicated to implement.

The Internal Revenue Service will review the partial payment installment agreement every two years to determine if the taxpayer’s financial situation has improved. If it has, the IRS has the legal right to increase the PPIA payments or cancel the partial payment installment agreement.

Currently Not Collectible

There will be certain District of Columbia taxpayers who are not able to pay their federal tax debt. The IRS has the authority to declare their tax debt as currently not collectible. This debt status change will stop all collection actions against the District of Columbia taxpayer. Penalties and interest will continue to accumulate on all of the outstanding tax debt.

The IRS will send the taxpayer notice each year outlining their outstanding IRS tax debt. This notice is not considered a tax bill. The Internal Revenue Service has ten years to collect tax debt. If the IRS does not collect the tax debt before the statute of limitations expires, the IRS tax debt will be forgiven.

Penalty Abatement

District of Columbia taxpayers can be assessed penalties for failing to file a federal tax return, reporting incorrect financial information or requesting a false refund. If the District of Columbia taxpayer has a valid reason for the tax infraction, the IRS may reduce or cancel the penalty. Deteriorating mental or physical capacity, incorrect tax advice, natural disasters or personal duress could all be valid reasons. The IRS may refuse to dismiss all penalties and interest. District of Columbia taxpayers who have outstanding tax penalties may want to contact a tax professional to discuss penalty abatement.

IRS Tax Settlement Options In Iowa

The Internal Revenue Service (IRS) has been given the authority by the federal government not only to collect taxes to fund government activities, but if necessary, to settle federal tax debt for less than the full amount owed. The IRS may be willing to negotiate a tax settlement if they believe the negotiations will allow the Iowa taxpayer to meet all future tax liability. Iowa taxpayers who owe IRS back taxes may have tax settlement options to eliminate the aggressive tactics of the IRS.

Iowa taxpayers who are interested in an IRS tax settlement option can contact a tax professional such as an enrolled agent, certified public accountant or tax attorney.

Offer in Compromise

Offer in Compromise or OIC is used by many Iowa taxpayers to settle IRS tax debt. Offer in Compromise allows the Iowa taxpayer to make an offer to the IRS for generally less than the full amount owed. If the IRS accepts the offer, it is considered a compromise settlement and the amount outlined in the OIC will be settled. Penalties and interest continue to accrue until the OIC is accepted.

The Internal Revenue Service will not accept all offers. Negotiations and appeals may be necessary to help all parties find an OIC amount which is acceptable. Offer in Compromise can be complicated and expensive. The IRS may request large amounts of detailed financial data which can be used to continue debt collection if the Offer in Compromise offer is denied. Offer in Compromise is one of several IRS tax settlement options and it may not be the best option for all Iowa taxpayers.

Qualifying for Offer in Compromise

Iowa taxpayers must prove one of the following conditions for the IRS to consider accepting the Offer in Compromise offer:

• Doubt as to Liability- This condition assumes there might be a discrepancy in the amount of debt calculated. This can occur if the IRS made a calculation error or if the taxpayer has new information concerning their debt. This condition is seldom used.

• Doubt as to Collectibility- Under this condition there is not a question about the amount of tax debt owed, only the ability of the IRS to collect the debt.

• Effective Tax Administration- If an Iowa taxpayer can prove that paying their tax debt could cause “an economic hardship which is unfair and inequitable” they may qualify for an Offer in Compromise. The elderly and handicapped most frequently meet this condition.

Iowa taxpayers applying for an Offer in Compromise must also complete the following:

• Iowa taxpayers must pay all of their IRS tax debt on or before the federal tax deadline for the next 5 years.

• All Offer in Compromise requirements must be paid by the Iowa taxpayer.

• Iowa taxpayers must submit all of their Internal Revenue Service tax returns on or by the federal tax deadline.

Installment Agreement

Iowa taxpayers who do not qualify for an Offer in Compromise or who want an IRS tax settlement plan which is less time consuming or less expensive can use an installment agreement. With an installment agreement, the Iowa taxpayer makes monthly installment payments to repay all of their tax debt. Iowa taxpayers who owe $25,000 or less in tax liability may be able to use an installment agreement to pay their outstanding tax debt within 60 months. Iowa taxpayers who owe more than $25,000 should contact a tax professional to discuss the best option for settling their IRS debt. The IRS will stop their collection efforts during the installment agreement, but interest and penalties will continue to accrue. To reduce the amount of taxes paid, it is always best to pay all tax debt in one lump sum payment.

The IRS can revoke an installment agreement (IA) for any of the following reasons:

• The Iowa taxpayer fails to make all of their monthly tax payments.

• The Iowa taxpayer does not file their tax returns.

• The Iowa taxpayer pays less than the required monthly payment amount. The IRS may give first time violators 30-60 days to make payments.

• The Iowa taxpayer’s financial condition substantially improves.

• False or inaccurate financial information was provided to the Internal Revenue Service by the Iowa taxpayer during the installment agreement application process.

Iowa taxpayers who are applying for an IA must meet all of the following requirements:

• All self-employed Iowa taxpayers must file quarterly federal tax returns and make quarterly tax payments.

• Iowa taxpayers must submit all of their federal tax returns.

• Iowa taxpayers must pay their federal tax debt for the 5 years before the tax liability which can not be paid.

• Iowa taxpayers can not have made another installment agreement with the Internal Revenue Service within the last 5 years.

• The Internal Revenue Service will review the Iowa taxpayer’s financial situation every 2 years.

Partial Payment Installment Agreement

Another popular method to settle IRS tax debt is the partial payment installment agreement (PPIA). The PPIA allows Iowa taxpayers who can not pay all of their IRS debt to make partial monthly installment payments. If the IRS accepts the PPIA plan, all debt not paid will be forgiven. Many Iowa taxpayers choose the PPIA over the Offer in Compromise because it can be less complicated, less expensive and less time consuming.

One benefit of the PPIA is that the IRS will cease all collection efforts including: wage garnishment, bank levies, and repossessions. Penalties and interest will continue to accrue during the payment period. The partial payment installment agreement will be reviewed every two years by the IRS to determine if the taxpayer’s financial situation has changed. The IRS may increase the Iowa taxpayer’s monthly payments or completely cancel the PPIA.

Currently Not Collectible

If the IRS determines that an Iowa taxpayer’s debt is not collectible they may change the debt status to “currently not collectible”. Under this status, debt collection efforts will cease. The IRS will send written notification each year to the Iowa taxpayer detailing the amount of tax debt owed. This notification is not considered a tax bill. If the IRS fails to collect the debt within 10 years, the collection time will expire and the IRS tax debt will be forgiven.

Penalty Abatement

The IRS may fine tax penalties to an Iowa taxpayer for a series of tax infractions including: not filing a tax returning, reporting incorrect tax data, or requesting a false refund. There may be a valid reason for the error and if this is the case, the IRS may be willing to reduce or eliminate the penalty. Valid reasons could include: false information from a tax professional, deteriorating mental or physical health, or natural disasters. The IRS may not be willing to lower or dismiss all penalties. A tax professional can help evaluate penalties and negotiate penalty abatement with the IRS.

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