Tax Resolution Methods

There are many reasons why an individual or business might owe the IRS and therefore have to get a problem resolved. As a result the IRS has indicated several methods of resolution that they will accept. The most common of these are Offer in Compromise – This is where the taxpayer will offer to settle the debt for an amount less the full debt. In the event where Offer in Compromise is not appropriate, there are other resolution methods which we briefly describe here.

Penalty Abatement

If the taxpayer qualifies, the IRS will waive these penalties which were imposed on a tax debt for good cause. The burden of proof lies with the taxpayer to show that he was exercising ordinary care when the penalties were incurred.

Installment Agreement

An Installment Agreement is an agreement between the IRS and the taxpayer, proposed by the IRS, that allows the taxpayer to pay the taxes owed over an extended period.

Currently Not Collectible

If the taxpayer can prove to the IRS that he is unable to honor his tax liability without causing himself severe hardship, the IRS may consider placing the account in Currently Not Collectible status. The IRS will review the taxpayer’s evidence presented against national standards of living to make its determination.

Innocent Spouse

The IRS may permit one spouse to avoid joint responsibility for the other spouse’s federal income tax liability and only assess the tax that is attributable to the innocent spouse. This is a complex method but may be viable for some taxpayers.

Statute of Limitations

As a general rule, there is a statute of limitations on IRS collections of 10 years. As the deadline approaches, the IRS will try to collect as much as possible before the passing of the deadline and as such may apply tax lien and levy to ensure collection. It is important for the taxpayer to act appropriately during this period.

These and many other methods that may be utilized in order to allow taxpayers to resolve any open debt with the IRS and give them a opportunity to pay as little as possible to settle this debt.