Tax Debt Relief: Paying, Reducing & Negotiating Tax Debt

Last updated on July 12, 2021

If you have a tax debt, you are not alone. Thousands of American taxpayers owe taxes to the IRS, some a little more than others. If the amount you owe to the IRS has grown substantial, it might be time to take outside help. Tax relief services provide much needed help to taxpayers in paying, reducing and negotiating a case of tax debt with the IRS. They help save a taxpayer’s money, time and effort in resolving taxes owed.

Paying Tax Debt

Paying back taxes to the IRS in full in a single payment is simple Taxpayers can call the IRS on the bill they receive, write to the address mentioned on the bill or visit their local IRS office to pay the tax debt. In many cases, the IRS agrees to make the full payment within 60 or 120 days. The IRS welcomes full payments of tax debt and is most likely to agree with short-term agreements that help taxpayers pay the debt amount in full.

In most cases of back taxes, however, taxpayers are not able to pay the full tax amount due because of financial constraints. For them, the IRS has debt payment programs such as Installment Agreement and Offer in Compromise.

Under Installment Agreement, taxpayers can pay their tax debt in fixed monthly installments over a period of time, usually a few years. The amount to be paid by taxpayers every month is determined by the mutual consent of both the IRS and the taxpayer applying for the agreement.

Although the IRS looks to get large amounts in payment every month to recover the debt quickly, taxpayers can negotiate with the IRS to reduce the amount to be paid in monthly installments. Most taxpayers take the help of tax resolution companies or tax professionals to get the best terms under a tax debt payment agreement.

Reducing Tax Debt

Offer in Compromise is a debt reduction program of the IRS that helps in reducing back taxes of taxpayers who cannot afford to pay the entire amount they owe to the IRS. Taxpayers need to be aware that the IRS only considers those taxpayers for Offer in Compromise who are in a financial crisis and can only afford to meet basic living needs.

Under Offer in Compromise, the IRS agrees to reduce the tax debt of taxpayers. The amount of debt reduced depends on the total taxes owed and the financial condition of taxpayers.

Negotiating of Tax Debt

Taxpayers need to negotiate the terms of an IRS agreement if they are not paying tax debt in full in a single payment. If they are considering applying for Installment Agreement, Offer in Compromise or Currently Not Collectible, they are advised to take expert help to negotiate its terms and conditions with the IRS. Tax attorneys or enrolled agents can best resolve a tax debt case by getting maximum relief to taxpayers.

Before hiring expert help, taxpayers are advised to research the services they have shortlisted. Our detailed reviews of tax resolutions services will help taxpayers in choosing the right help.