IRS or tax debt settlement is a process which is approved by federal bodies of IRS and is available to people who act in good faith to settle their back taxes. A few of these settlement options are installment agreements, partial payment installment agreements, offers in compromise, or proving a financial hardship. Debt settlement companies have till date provided reliable debt relief programs and debt settlement leads to several US debtors, in order to reshape their distorted financial face and thus the facility should also be available to taxpayers who have for some unavoidable un-fortune failed to pay their taxes to the government. Unlike a common debt settlement program, tax debt settlement is governed by a different set of regulations wherein the role of a debt settlement attorney is irrelevant. For the most part, private financial institutions or lenders give debtors room to legally maneuver through a substantial debt, but the federal government operates with a heavier hand, should unpaid federal taxes begin to collect significant interest and remain unpaid for a specified period of time. An installment agreement amounts to a structured monthly repayment plan similar to a consumer debt management plan. The paperwork can be filed by the taxpayer or a tax professional. This settlement is the most commonly deployed tax debt solution. Once the IRS accepts the terms of the installment agreement, the taxpayer will be considered in good standing with the federal government provided the debtor maintains the agreed upon minimum monthly payments. Another IRS debt settlement method is the partial payment installment agreement which relieve the taxpayer of the full tax liability. Instead, the federal government agrees to the terms of a schedule of regular minimum monthly installments on a portion of the original tax liability. The IRS often advices the debtor to consult a tax professional before opting for this method as it is a much newer tax relief option and much information should be gathered by the applicant.
To some it may even sound more complicated than credit cards debt settlement process but in that case one should be aware of the federal options and regulations with the help of a professional tax lawyer. It should be known that the tax codes and laws are continually changing and are getting reviewed thus the assistance of a tax professional is significant in keeping the debtor updated about any change or edition of tax codes and regulations. The IRS defines an offer in compromise as “an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.” The federal government will accept a lower tax payment only if the taxpayer has established an inability to pay the debt outright, or by enrolling in one of the installment arrangements. In this case the federal government will assess the debtor’s total assets, income and basic living expenses to derive a reasonable collection potential which will decide the amount pliable by the debtor as tax. Lastly a debtor can also take help of ‘financial hardship statement’ and bankruptcy if all other options seem to fail. Nevertheless the government provides ample chances and options to help the taxpayers deal with their tax backlogs.