Tax debt is arguably the most intimidating financial obligation a person can face because the Internal Revenue Service (IRS) has the power to take more aggressive collection actions than many other entities. Tax debts could lead to wage garnishment or government levies against personal property. Additionally, the IRS can recommend the prosecution of someone the agency suspects of tax fraud or tax evasion.
Most people dealing with tax debts are eager to get them back under control. There are businesses that advertise on the radio and elsewhere about how they can help people settle their tax debt or less than they owe. But, will the IRS really agree to accept less than the full tax debt owed?
The IRS will compromise, but some offers are scams
As companies often claim in their advertisements, the IRS will sometimes agree to accept less than the whole amount of someone’s past taxes. However, working with a tax settlement service may not be the best solution.
Some of these companies make promises they cannot keep. They may take someone’s money without ever finalizing arrangements with the IRS. The individual who thinks they have settled their tax debt might end up owing even more in the long run. The IRS can continue to assess interest and penalties while someone makes payments to a fly-by-night business.
The only real way to reduce tax debt is to negotiate an offer in compromise with the IRS. Most people will have an easier time achieving this feat by partnering with a lawyer they hire themselves rather than some large business making questionable promises in advertisements. An offer in compromise can involve a lump-sum payment or a payment plan.
Ultimately, settling tax debt often requires careful planning and direct communication with the IRS. Seeking legal guidance accordingly can be helpful.