Millions of Americans struggle every year to settle back taxes. According to Investopedia, in 2009, an IRS spokesperson estimated that 8.2 million Americans owe over $83 billion in back taxes. This estimate includes back tax debt, plus penalties and interest. For penalties and interest, the IRS spokesperson estimated that at approximately $10,000 per person. Back tax debt can be crippling. Many Americans wonder how to pay back taxes. The answer is somewhat simple: seek the help of a tax resolution firm. Even though it’s stressful owing money to the government, millions of Americans fall behind on back tax settlement every year. If you’re struggling to pay back taxes, call the experts at Platinum Tax Defenders. Our expert team of tax relief specialists can help you settle your debt for less than you owe. In the meantime, here are a few ways you can settle back taxes.
Settle Back Taxes With an Installment Agreement
An IRS payment plan, or Installment Agreement, is one way to settle back taxes. With an Installment Agreement, you and your tax resolution specialist arrange a deal with the IRS. You work out a plan to pay back an affordable amount each month. There are two types of Installment Agreements that the IRS makes available.
Short-Term Payment Plan
A short-term payment plan allows you to settle back taxes in 120 days or less. There is a $0 fee to apply online, by phone or in-person. The IRS will automatically withdraw the monthly payment from your checking account. Alternatively, you can settle back taxes by paying with a check, money order, or debit/credit card. To qualify for this type of tax resolution, you can’t owe more than $10,000 in combined tax, penalties, and interest.
Long-Term Payment Plan
A long-term payment allows you to settle back taxes in 120 days or more. There is a $31 fee to apply online and a $107 fee to apply by phone, mail, or in person. There are higher fees for paying by other methods. To apply for the long-term payment plan to settle back taxes, the max you can owe is $50,000. The $50,000 includes the total back tax debt, including combined tax, penalties, and interest.
How Does An Installment Agreement Help Settle Back Taxes?
It’s important to note that an Installment Agreement doesn’t get you out of paying interest and penalties. Interest and penalties will continue to accrue until your balance is zero. Additionally, if you owe more than $25,000 in back taxes, you must pay via automatic bank withdraws. Paying by debit or credit card will also incur a processing fee. The fee for debit cards typically runs between $2 and $4.
Settle Back Taxes with an Offer in Compromise
Another way to settle back taxes is through an Offer in Compromise. This tax resolution program allows you to settle back taxes for less than you owe. The IRS makes this tax relief program an option if you absolutely can’t afford to pay back taxes. Platinum Tax Defenders has years of experience winning Offers in Compromise cases for their clients. In one example, the top tax defenders team successfully lowered back taxes from over $100,000 to just $100. Whenever attempting to negotiate an Offer in Compromise with the IRS, it’s best to work with a tax resolution professional. It’s often difficult to get the IRS to sign off on an Offer in Compromise deal than a payment plan. According to Investopedia, the IRS accepts fewer than half of all Offer in Compromise requests. When determining if you qualify for an OIC, the IRS looks at:
- Your ability to pay
- Income and expenses
- How much you have in assets
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What is the OIC Application Process?
There are several forms you must submit before filing for an Offer in Compromise. A professional tax resolution expert can help you determine which forms you must complete. There is also often a fee associated with applying for an Offer in Compromise of $186. This fee is non-refundable; however, low-income taxpayers can also get the fee waived. There is also an initial payment you will have to make that is also non-refundable. The IRS requires you to be current on all your tax returns. If you have not filed your taxes in a while, you may not qualify. Additionally, the IRS can keep tax liens in place until it accepts your offer. If you are in an open bankruptcy proceeding, you will not qualify for an Offer in Compromise.
What if the IRS Accepts My Offer in Compromise Offer?
If the IRS accepts your OIC offer for back tax settlement, here’s what you need to know. You must make an initial payment of at least 20% of what you’re offering to pay. You will have to pay 20% if you are paying in five or fewer payments. If you are paying in six or more payments, you must pay 20% of your first monthly payment. Additionally, any federal tax liens the IRS has open will not go away until you’ve settled your back taxes.
Settling Back Taxes With Currently not Collectible Status
If you can’t pay both taxes and living expenses, you may qualify for Currently not Collectible. Receiving this designation allows the IRS to stop collecting on your account until your financial situation improves. The IRS may ask you to complete a Collection Information Statement that will prove your finances are as bad as you say. In that case, you’ll need to provide information regarding your monthly income and expenses.
What Should I Know about Currently Not Collectible Tax Relief?
There are some things you should know about filing for Currently not Collectible.
- First, the CNC status is only temporary. The IRS can review your income annually to see if your financial situation improves.
- Currently Not Collectible status does not settle your back taxes or make them go away.
- The IRS can still file a tax lien against you.
Should I Hire a Tax Resolution Company?
Hiring a tax resolution company like Platinum Tax Defenders can be extremely helpful when attempting to negotiate with the IRS. If you’re confused about the process or need help filling out forms, a tax resolution firm can also come in handy. Tax resolution professionals can handle any tax settlement situation. Hiring one can mean the difference between paying $1,000 in back taxes and $100.
Need help with Settling Back Taxes? Call Platinum Tax Defenders
The professionals at Platinum Tax Defenders have been helping taxpayers settle back taxes for several years. Platinum Tax Defenders has experience in all types of tax resolution. We are currently offering free consultations for new clients. For more information, and to see how we can help, call Platinum Tax Defenders today. We can be reached at 866-866-8053, or by visiting www.platinumtaxdefenders.com.