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Managing Tax Debts

April 19, 2012 | Comments: 0 | Views: 126

Dealing with the IRS is not a pleasant experience for anyone, especially if you owe them money. Although unpaid taxes are a hassle for the taxpayer, they are also a problem for the IRS. As with anyone you owe debts to, the IRS is serious about collecting their money and may even have more legal recourse than typical creditors to collect their money. However, there are several ways to manage tax debts easily and without disturbing your monthly budget.

IRS Debts

The IRS is kind enough to offer taxpayers several options for resolving unpaid taxes. The first is a basic installment plan. The tax debt installment plan allows you to repay your debts over a series of smaller payments, typically over a period of two to three years. Under this plan, you can negotiate your debt payments with the IRS to a level that you can reasonably afford. There are several different versions of the installment plan, each varying on the terms and conditions available. However, the IRS is the one who ultimately determines which plan you will be eligible to participate in and payments are often based on the amount of your disposable income. Qualifications for the installment plan require that you not owe more than $25,000 and have a filed tax return for the debts in question.

For those who are experiencing financial hardships, the IRS offers two ways to resolve tax troubles. The partial payment installation agreement involves a long term payment plan that extends until the statutory expiration period ends. In other words, you would make payments in an amount that you can afford until the collection statue period runs out.

The second option is a tax debt settlement plan called an Offer In Compromise. In this plan, you propose a settlement deal that includes your agreement to pay a specified amount that you can reasonably afford to repay, which is less than the actual amount owed. If the IRS determines that your offer is fair and greater than or equal to the amount your finances will allow for repayment, they may grant approval. However, it is important to note that less than 15 percent of Offer In Compromise agreements are approved. This is because the IRS typically deems the taxpayer's income to be sufficient enough to repay more than was offered. To avoid having your Offer In Compromise denied, be sure to present the best offer possible and be able to provide proof of your financial hardship.

The Lee Law Firm's foreclosure lawyers have many years of experience in all aspects of IRS debt problems. They have extensive experience with IRS problems and provide Dallas tax clients with a plan to eliminate their tax debts and obtain a solid financial future.

Source: EzineArticles
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