Besides tax deductions, clients often request recommendations about IRS debt from Myles Haverluck tax and finance expert. According to Haverluck, the key to a bottom dollar tax settlement with the IRS is proving you have little to no disposable income to pay off the debt, but this is more challenging than it seems.
Any type of bottom dollar tax settlement that is advantageous to the taxpayer will include a review of the taxpayer’s financial status. As pointed out by Myles Haverluck tax debt settlement hinges on the taxpayer having very little disposable income, as well as saleable liquid assets to pay off back debt. Taxpayers can choose between two effective tax settlement methods;
1. Hardship Status; hardship status sounds straightforward, yet the IRS has their own national guidelines to meet, that is way below what most people would imagine. You would think simply gathering documents such as monthly income and bills will portray a debt-ridden individual, however, IRS has their own definitions.
When seeking a hardship status, taxpayers are really delaying any collection actions. The IRS will place your case in an “uncollectible status” and will perform checks on the case every six to nine months. After a certain period of time, the statute of limitations will clear your responsibility for the debt. Taxpayers must qualify for hardship status.
2. The second method of obtaining a bottom-dollar tax settlement is by seeking an Offer and Compromise. Obtaining an IRS tax settlement using this method uses some of the same guidelines as a hardship status; however, the process is more invasive. Seeking an offer and compromise is one of the best techniques for an IRS tax debt settlement. Taxpayers often pay about one-fourth of the tax debt owed and the new amount is payable within twelve to twenty-four months, if approved.
But as Myles Haverluck points out, any taxpayer negotiating an IRS debt settlement on his or her own behalf is making the wrong decision. Consultation with a tax expert is a must, and should always be the first step before providing any details to the IRS