Offer in Compromise

An Offer in Compromise, also known as an OIC, alleviates tax liability-in rare cases (less than one percent). Because Offers in Compromise are accepted so seldom, you shouldn't count on getting one. There are only three cases where the IRS will accept an Offer in Compromise: (a) The IRS isn't sure about the authenticity of liability, (b) the IRS doesn't believe that you'll be able to pay the full amount, or (c) you prove that your circumstances justify not being able to pay your taxes. This option can be rather messy, and you'll likely need the help of a tax expert, which we can provide you with.

Requesting Tax Penalty Abatement

When you fail to pay your taxes on time, in the full amount, the IRS charges you a penalty and late fee(s), and the process is carried out automatically by computer. On occasion these penalty and late fees can be dismissed or even reimbursed. You'll have to have a suitable reason (natural disaster, family death, unemployment issues, etc.) to even be considered for abatement, and you're required to present a commitment to the IRS for repaying debt. This is another procedure where you'll need the help of a tax expert.

Wage Garnishment Troubles

Up to twenty-five percent of your disposable income can be appropriated by the IRS as payment for your tax debt. This practice is known as garnishment. Your employer is legally obligated to set aside this portion of your earnings if the IRS gets a court-approved wage garnishment certificate. If you're already in debt, garnishment of your wages can exacerbate your situation even more. A tax expert can see if you're eligible to be released from wage garnishment or if the wage garnishment certificate can be frozen. You may be able to pay off your debt in installments.

Payment Plans through the IRS

You don't want to be stuck making late payments to the IRS; the interest will compound every day, and stern late fees are charged every month. If you do fail to make pay your taxes fully, you still have a trio of options: an IRS tax loan, short-term payment extension, and an installment agreement. If you can get a payment extension, you'll have an additional ten to one hundred and twenty days to pay off your taxes. You will, however, still be charged interest and late fees despite the extension. Lastly, an installment agreement allows you to make monthly payments on your tax debt until it is fully paid off. Even though you may not be able to pay straight away, be sure to file your taxes still! If you're looking for student loan consolidation, please check out our next page.