How To Settle Your Commercial Tax Debt
Tax debt. The word “debt” alone isn’t a desirable situation for anyone to be in. The good news is that there is a chance you can settle for less than what you owe which is known as Offer in Compromise (OIC). You’ll have to contact the IRS to see if you qualify for an OIC, however this option isn’t available to individuals who are in bankruptcy
The four areas that IRS will look into during your assessment of OIC are as follows:
* Ability to pay
* Asset equity
In summary, here is the process on how to settle your tax debt with IRS.
* Obtain the Form 656 to register for an Offer in Compromise (OIC)
* Make an application fee payment of $186 to submit the form
* Agree to disclose and provide your entire income information, equity, assets details and expenditures.
* If you’re self-employed or earn a regular salary, you’ll need to fill out Form 433-A’s “Collection Information Statement” and send in required documents to back up your information.
* The IRS will assess your entire submission. If they decide to agree to your application, this is when you’ll be contacted to negotiate a reduced tax payment.
* Between you and the IRS, the discussion entails coming to an agreement on the percentage and duration of your tax debt payback.
* When all is agreed upon, you’ll be provided two years to pay off that tax debt money. Nevertheless, you’ll still be required to file your taxes continuously annually. Any refunds obtained from filing during this two year duration, the IRS will factor the sum towards your tax payment.
Last but not least, a critical point here is that while you’re in the process of filing for an OIC, you aren’t free from accrual of tax interests and penalties. Unfortunately, there are only very little circumstances that can prevent IRS tax penalty accruals.
Even when you file for an OIC, while the IRS reviews your application package, you’ll still be hit with penalties. Only when you finally arrive at a solution with IRS will the penalties stop. Agree to repay the requested amount and you’re set free from any further financial damages.
As the OIC process is a rather tedious process that requires deep tax expertise, you should consider contacting the tax consultants at MWB Tax Solutions at (612) 524-5811. Based on your request, our team of experts can provide you with confidential and effective support. Contact us now.