Posted On January 05, 2014

The IRS will negotiate payment plans for back taxes

One of the activities of law firms representing taxpayers who owe back amounts is to negotiate payment plans with the IRS to assist the individual in finding a resolution to a situation that has usually gotten out of hand. The IRS participates in negotiations to find agreements with taxpayers who are stretched and have had difficulties with their tax debts. Whether residing in Nevada or another state, the key is to find the highest monthly payment that the taxpayer can realistically make and still survive.

A payment plan that is too demanding could fall apart quickly. The cycle then starts up again and the taxpayer will likely be back at point one again. It’s important therefore to negotiate realistically and for the tax attorney to have an intimate understanding of the client’s financial limits as well as capabilities. Before making an offer in compromise or a request for a payment plan to settle tax debts, several steps should be taken.

All tax returns should be filed. Make sure that the payment plan is the only alternative. If credit is available is may turn out to be less expensive than the IRS deal. One good thing that the client should understand is that all tax refunds will continue to be applied automatically to the debt until it’s paid. That can bring a final resolution earlier than expected.

A hardship situation essentially must be established when making an offer in compromise to the IRS because this remedy allows for payment of less than the full amount owed. A detailed presentation of the taxpayer’s assets, bills, and income must be made. Explanations should be submitted telling the agency why a hardship exists that makes it virtually impossible to make a full payment. The taxpayer can always benefit by first consulting with a tax attorney in Nevada to find out one’s rights, duties and options available.

Source: accountingweb.com, IRS Hikes Fees for Settling Tax Debts, Ken Berry, Dec. 30, 2013