If you have unsettled back taxes and are in desperate need of help, beware of those looking to take advantage of your vulnerability. We mean all of those companies promising to help settle your debt for ‘pennies on the dollar, ’ specifically. Like the age old advice, if something sounds too good to be true, it probably is. And this stance holds true for taxes, too.
Tax companies and proclaimed ‘tax experts’ have taken a common IRS tax settlement plan called the ‘offer in compromise’ and skewed it to convince consumers of exaggerated or just plan false claims. How do they do it? Because the nature of the offer in compromise plan is meant to compromise debt, and thus, find a win-win resolution for both parties involved, the situation usually does include a portion of debt being reduced. However, the entire offer in compromise procedure and approval process is very hard to come by.
For the IRS to approve an offer in compromise (which happens only about 13% of the time), they must be certain that the amount offered by the taxpayer is of greatest potential amount to be collected. This means that a debtor must prove his or her inability to ever pay the total amount in full, but also his or her ability to begin making small payments towards freeing the debt. Because the IRS deals with so many offer in compromise requests, they are able to reject the, regularly. They also are able to put off action- making you wait, and wait, and wait. In the end, offer in compromises rarely go through, and the taxpayer sees themself in the same situation in which he or she started.
So, if an offer in compromise isn’t the best solution, what is? An alternative solution, called the installment agreement, does not reduce debt like an offer in compromise, but still allows a taxpayer to pay back debt over a period of time. Installment agreements work to help to debtor pay back money in small, manageable amounts, and satisfy both the IRS and the taxpayer. While we aren’t saying that an installment agreement is for everyone, it is a more realistic option for most.
Companies often use the offer in compromise agreement to lure debtors in, yet leave so many of them in the dust. It is hard to recognize who out there may be actually working for you, or purely working for your money. This being said, many agencies are extremely helpful and there to help, so it is important to do as much research as possible before choosing a tax professional. And, even after you’ve picked an expert and tax solution, remember, if something sounds too good to be true, take a step back and question its credibility before taking any further action.
Find more information on the offer in compromise along with other types of irs tax settlements and connect with a tax professional that may assist you with your tax issues today at .