IRS Payment Plans - Missing Tax Returns - IRS Settlements - One Low Flat Fee

Here we are in the middle of July and, by now, most people have filed their income tax returns. The summer heat is here as well and I bet many of you are feeling a little hot under the collar as you had a large income tax debt with your 2015 tax return. You may also owe for previous tax years.

I am hoping you have dealt with it and paid the balance in full. If so, then you are in the clear until next year.

If you have not dealt with it by either not paying the bill in full (or at all) or you just simply haven’t filed your return yet for fear that you will owe a large amount of money that you don’t have, NO NEED TO PANIC. There are ways to deal with this.

Our IRS tax relief team speaks with people every day in this type of situation. Many of them are people that you would think could not possibly be in that position, but they are. Our job and purpose is to help you, the taxpayer, get the problem dealt with as soon as possible. Our mission statement is “We work hard to protect you from the IRS so you can sleep better at night!” We enjoy succeeding and helping people to sleep better, take control of their life and help keep cash in their pocket.

There are three primary categories for people to fit into when dealing with their IRS debt. Let’s discuss some of the requirements of all of the IRS payment options. You must be current and compliant. What does that mean? You must have all of your income tax returns filed (at least for the last six years) and you must be making payments toward the current year through federal withholding or estimated tax payments. The goal for the IRS is to get you back into the system (if you have outstanding tax returns) and getting you to pay the current year taxes.

In addition, depending on the payment option you fit into, you must file your returns timely and pay any tax due in full each year. This means that you cannot have any unpaid outstanding tax liabilities.

You might ask yourself  "what are the payment options I have to choose from"? Well, your options will depend on your particular facts and circumstances, but here they are: You can enter into an Installment Agreement (monthly payment plan), be put into Currently Not Collectible (CNC) status, or submit an Offer-in-Compromise settlement(OIC).

1. Installment Agreement: You will make monthly payments toward your income tax debt. Penalties and interest will continue to accumulate as you pay. A Federal Tax Lien may be filed against you even though you are making payments.

2. Currently not Collectible: You will not make payments on your unpaid income tax debt. The IRS will file a Federal Tax Lien against you. The IRS will confiscate your tax return. Penalties and interest will continue to accumulate. The Statute of Limitations will continue to run out.

3. Offer in Compromise: This is a settlement of your income tax debt based on a taxpayers ability to pay their debt. It takes approximately 10 to 12 months to complete. The IRS must leave you alone during the process. When your settlement is approved and paid, the Federal Tax Lien will go away.

There are many options for the IA depending on the amount you owe, how much you can pay each month and how much time is remaining on collection statute of limitations. The Statute of Limitations is a 10-year clock that starts running when the tax liability is first established. This can be by your filing an original return (even if it is filed late), the IRS files a substitute for return (SFR) because you have not filed and they believe you should, or even by owing additional money after an IRS audit.

This clock will generally run whether you are making payments or not. Please be aware that there are some times when this period is suspended (i.e. clock temporarily stops).

In general, if you owe less than $50,000 (including tax, penalties and interest ... this amount is $25,000 for businesses), and can pay the balance in 72 months or less, then you should be able to easily enter into an Installment Agreement without much great effort. If you owe over that amount, you have to jump through a few more hoops, which include submitting financial data on your assets, liabilities, income and expenses.

To be put in Currently not Collectible status, you need to submit financial information along with the appropriate documentation that shows you basically have no equity in any assets or have any leftover income after paying your necessary living expenses. Of course, the IRS determines what is necessary. But once you get put into Currently not Collectible status, all collection activity stops, the Statute of Limitations continues to run, but the IRS can review your case every year.

To file an Offer in Compromise settlement, this is where you get to pay an amount that is substantially less than what you currently owe. You still have to submit full financial information along with documentation. The process generally takes one to two years to complete. The "not so good" part is the Statute of Limitations clock stops while you are in the process, but, if your settlement is approved, "who cares" about the Statute of Limitations..

You also must file all tax returns timely and not owe even a dollar when you file and settle the bill and continue to do so for the next five years. But once you have met these requirements, you are in the clear and you will never owe these taxes again.

In some small tax due cases (generally under $10,000), you can handle it yourself, but I recommend you seek a professional in dealing with the IRS. the IRS is not your friend and they will not tell you what your best options are.