How to Settle IRS Tax Debt Without a Tax Attorney

How to Settle IRS Tax Debt Without a Tax Attorney

Don't count on luck to get you out of tax delinquency.

Luck plays no part in obtaining tax relief.If you think that you've been lucky because the IRS hasn't found you in years; don't press your "luck".When they do find you (and we all know they will) good luck is harder to come by than a winning lottery ticket.Vast knowledge of federal guidance and criteria for the approval of tax relief programs is the best kind of "luck".The job of an IRS agent is to extract every penny they think you owe, plus penalties and interest.They are not shy to use their enormous power to seize your assets. The job of the Tax Relief professional is to intercede with the IRS and negotiate the best settlement the law allows.

Don't wait for the IRS to approach you.

By the time an IRS agent gets to you, most likely they have written you 25 -50 letters requesting the money or simply that you call them.It will be hard to convince them of any good intentions you may have at that point.Further, when your paycheck is garnished, bank account seized and home is set for auction, you are not in much of a position to negotiate.Acting quickly and decisively to clear up your debt is the best move. Thinking the IRS will wait indefinitely to collect is like believing that California won't have any more earthquakes because the ground isn't shaking today.Contacting the IRS before they contact you will always work in your favor in the subsequent negotiations.Dealing with your tax problems' before the IRS lands on you, proves that you are not willfully neglecting your taxes and that you are showing "due diligence" in paying your debt.Those phrases make you look substantially better in the eyes of the IRS.

Don't waive your collection time limitations if you enter into an installment agreements.

If you can't pay your tax bill, be careful about entering into installment agreements that sound too easy.The IRS will often ask you to waive the 10 year time period they have to collect. This is done on a form that sounds harmless enough called a "Waiver of Tax" form. Its not taxes you are waiving but the statute of limitations...don't sign it.In some cases, IRS agents agree to let taxpayers make small monthly payments, if they are small and you can easily afford the paymenttake it.The problem is interest and penalties usually accrue rapidly, so the debt is chipped away at a snail's pace, if at all.In the worst cases, your balance increases over time, because the penalty and interest are greater than your payment.

Work out the best deal up front.

When extenuating circumstances such as job loss or illness contribute to tax delinquency, it's sometimes possible to get the penalties and interest removed.To do this, however, it is imperative that you know the pertinent laws and regulations.Don't expect the government to point out the angles that work in your favor.Under the IRS Restructuring and Reform Act, IRS agents may smile more, but their goal is still to collect money, not show you the friendly path to reduced tax debt.It is easier to bring in these extenuating circumstances at the beginning of your discussions with the IRS than after you've already settled on one deal and begun making the initial payments.

Get current and stay current.

Part of the deal under which taxpayers can negotiate tax relief with the IRS includes staying in compliance with the IRS for five years.Compliance means:

a)File all tax returns their due dates with no exceptions. (I'm not talking extensions)

b)Businesses and Independent Contractors need to pay and file quarterly with no exceptions.

c)Employees need to lower the number of exemptions so that no taxes are owed at year end.

The magic number is $1,000.Money owed under $1,000 is not subject to penalties.It may be subject to some interest, but it is the penalties that provide the bite in a tax collection.Taxes owed over $1,000 are subject to penalties and interest and can quickly become a real burden.

Business owners: Don't live off Uncle Sam's Money.

Business owners who get into tax trouble with the IRS most often are those who don't make their employee withholding payments on time.Most often, they need the cash to pay other bills and incorrectly figure they can borrow from their tax savings account or payroll taxes and repay the money before it is required to be turned over with IRS via Form 941.When it comes to falling behind on payroll taxes, IRS agents show no mercy.If you find it's impossible to meet all the IRS requirements, hire a professional or payroll service to force you to follow the rules.

Know you have the right to representation.

Just like criminal are entitled to a lawyer when talking to law enforcement, taxpayers are entitled to a tax professional when dealing with the IRS.Even in the middle of a negotiation, if the taxpayer feels uncomfortable with the conversation, they have the right to stop the negotiation and inform the agent that they are going to hire a tax specialist.This is a good idea in the first place the IRS knows you haven't memorized some 72,000 tax codes and regulations.We've always felt the most powerful weapon in the IRS arsenal is ignorance of tax laws.A good tax professionals keep them in check for you.

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