How can I settle my tax debt?

As we get closer to the end of the year, tax season approaches. Whether you are a 1099 contractor, received a big bonus, didn’t have enough taken out of your paycheck for taxes, or had some sort of windfall, a big tax bill can be a nightmare. In this economy, more and more people are forced to make desperate decisions like cashing out a 401k early to keep up with bills after being laid off, or for unforeseen medical expenses, home repairs or other emergencies. For the most part, tax debt is non-dischargeable debt, meaning a bankruptcy would not be an option.

For some, a payment plan with the IRS for the next few years might be a decent option, if, for example, they are working full time and bouncing back from whatever financial crisis that caused them to have a big tax bill. If it seems that the tax bill is something you’ll never catch up with, there is another option that a lot of people don’t know about – it’s called an Offer In Compromise.

An Offer In Compromise (OIC) is just what it sounds like.  You can make an offer to the IRS to settle your debt just like you can for credit cards and other unsecured debts. It can be a long, drawn out process. Even just being able to talk to an IRS representative can be daunting. 

As with anything dealing with the government, this is a form intensive process. You have to come up with a reasonable offer and make an initial good faith (non-refundable) down payment to the IRS. Along with that payment, there is an application process, where you’ll need to justify why the IRS should accept less than the debt. 

This can take a while and not everyone will qualify for this type of relief.  Recently, I settled an OIC case for a client and the process took over six months, which was on the fast side. The IRS even states that this could be even an 18 month long process. During this application period, you will still have to pay your tax debt down (usually by surrendering your future tax refunds).  If successful, however, you could walk away without having to pay a large percentage of your tax debt.

An experienced debt settlement or tax attorney can walk you through the process, fill out the forms and help you figure out if an Offer In Compromise might be a good option. 

To schedule a FREE CONSULTATION with the Law Offices of Brandon Rosenbloom, call us at 678-609-8724 or contact us online today.