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Negotiating an IRS Debt Settlement

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Settling with the IRS

The Internal Revenue Service, or the IRS, has a secret they don't want you to know about. They know you are familiar with tax and with the fact that they will relentlessly haunt you until your debts are paid. They aren't upset about adding penalties and interest at insanely high rates, making your accumulated debts even more difficult to pay off, if you can pay them at all. What they don't want you to know is that just about any IRS debt you have can be negotiated and if you have a qualified IRS tax attorney on your side you can do just that.

Negotiating an Offer in Compromise (OIC)

The IRS offers a program known as the Offer in Compromise. The Offer in Compromise program allows you to create a personalized agreement with the IRS, taking what you are reasonably able to pay into consideration. You will offer to pay the IRS a lump sum based on what you are currently able to give them.

The IRS regularly sets up Offer in Compromise agreements in situations where they know that your tax burdens far outweigh your income or ability to pay. They are happy to take whatever you can pay instead of nothing at all, especially if you don't have many assets for them to levy.

There are three instances in which an individual would be allowed to compromise his IRS tax debt. These include:

A situation in which there is question as to the accurateness of the IRS tax assessment;
A situation in which the IRS doubts you ability to ever pay the tax debt in full; or
A situation in which attempting to pay the debt would cause an unreasonable economic hardship.

Negotiate with IRS Debt Settlement

Debt Settlements Accompanied IRS

Preparing your Offer in Compromise

You will have to work very closely with your IRS tax attorney in order to prepare your personal Offer in Compromise letter. The application process itself can become very complicated and can take anywhere from 6 to 18 months to complete. Once your initial paperwork is submitted to the IRS, however, they will stop attempting to collect your debts.

Make sure you give your attorney a copy of the IRS Form 2848 Power of Attorney form as well. Without this form he will not be able to represent you in front of the IRS as the IRS will refuse to speak to anyone other than yourself about your situation. You should also be prepared to pay a fee of $150 in order to apply for the Offer in Compromise program.

The Offer in Compromise is one of the best solutions for settling your tax debt. Setting up an installment agreement or having your account declared "currently not collectible" is even more complicated. The IRS will usually accept whatever you're willing to offer if it means collecting something over nothing. Let your IRS tax attorney help you to determine the best possible solution.