Owing the IRS money is one of the most stressful experiences a person can have. They have powerful tools to collect unpaid taxes and won’t hesitate to use them if you don’t take action. In some cases, it may be possible for taxpayers in Florida to qualify for relief through an IRS tax debt settlement.
How tax debt settlements work
If you are behind on your taxes or incorrectly filed them, the IRS may request an audit to determine the exact amount of money you owe, as well as any interests accrued over that time. After that, it’s up to you to devise a repayment plan. One option is to apply for a tax debt settlement, which allows you to settle your debt in one lump sum or through a series of payments.
The IRS will typically accept an offer if it’s equal to or less than the amount of taxes owed if they determine that that amount is the maximum they can expect to collect from you within a reasonable amount of time. However, this is not always guaranteed.
Requirements & eligibility criteria
To be eligible for a tax debt settlement, you must prove your financial hardship, have a reliable source of income to make payments and demonstrate that the amount owed is more than you can reasonably repay within the allotted time frame. Additionally, you should not have an open bankruptcy case, be up to date with your current filings and never ignore their communications.
You can submit an Offer in Compromise yourself to your local IRS office by filling out Form 433-A (or Form 433-B if you are a business) and Form 656, along with a non-refundable application fee of $205. If they accept your offer, you must adhere to the terms of the agreement lest they’ll hit you with additional penalties.
Tax debt settlements are not an easy way out, but they can help avoid criminal prosecution or harsh penalties such as wage garnishment and property repossession. If, unfortunately, they deny your application, there are other avenues you could use, like an Installment Agreement or a Partial Pay Installment Agreement (PPIA).