Many taxpayers are taken aback by a larger tax bill than they were expecting when April 15th rolls around. In many cases, this is also true for companies of a moderate size. The government often levies taxes on things that most people and businesses hadn’t even thought about. As a result, paying taxes may feel like trying to scale an insurmountable mountain. The good news is that a tax attorney may be able to help you reach a tax settlement with the IRS. Below this blog will help you understand the negotiation better.
This would result in the debtor having to make much smaller payments towards the debt than they otherwise would have to:
The first step in any tax attorney’s analysis is to compare the client’s or business’s total tax liability to the total income and discretionary cash flow. This data will help the tax consultant decide whether or not it is in everyone’s best interest to negotiate a tax settlement with the IRS. A tax debt settlement discussion is warranted if it is clear that the taxpayer cannot pay the full amount due because of other financial obligations.
Liability for the tax debt
Most settlements of tax debt with the IRS only cover a small portion of the total amount owed. Bar advocates typically succeed in settling debts for as little as 35% of the original amount owed, and sometimes even less. Once liability for the tax debt has been determined, the settlement amount will be paid in full. In the beginning, many people don’t realise this. The settlement is the amount that the government is willing to pay to avoid further legal action, as opposed to the full amount that it is legally obligated to pay. The payment schedule is not being renegotiated.
Tax relief through an IRS settlement is a viable option for nearly everyone with tax problems. Proof of satisfaction is necessary for the debt to be removed from the debtor’s credit reports and to be considered paid in full. In turn, this will help someone maintain a high credit score, which has many practical applications. However, settlement is a complex problem to solve.