Achieve Security Blog

What Is An IRS Tax Settlement?

A tax settlement is when a taxpayer settles their tax liabilities through one of the IRS programs/filings. The IRS offers settlements to taxpayers that are struggling with their tax debts or have valid reasons to abate their penalties. The IRS offers several different options for taxpayers to settle their taxes owed. The main factor the IRS takes into consideration when determining if the taxpayer will qualify for a tax settlement is their financial situation. The tax settlement that a taxpayer qualifies for is dependent upon their unique financial situation. The IRS prefers individuals to pay their taxes owed in full, but they will make exceptions for certain circumstances.

How an IRS Settlement Works

The IRS will allow a taxpayer to either negotiate a tax settlement for less than the total amount owed or come to an agreement on another method for the IRS to collect taxes owed over time. For either of these situations the taxpayer must meet the qualifications of one of the tax settlement programs set forth by the IRS. The taxpayer will first have to determine which type of tax settlement they would like to apply for and then submit the appropriate forms to the IRS for review before making a decision. A taxpayer can either fill out the information themselves or they can have a designated tax professional make the filing on their behalf. Once a settlement has been reached by both parties, the taxpayer will be considered good standing with the IRS for the tax year/years that the settlement covered (unless the taxpayer defaults or doesn't hold up to all the terms of the agreement).

How to Settle Taxes Owed

In order to make a settlement or agreement over your taxes, you first need to make sure you are in full compliance with your tax filings and be sure to file any unfiled tax returns. If you did not file and the IRS has filed for you, it is highly suggested you use a tax professional to file an amended return to decrease the amount of taxes owed (this is because the IRS does not give the taxpayer the benefit of the doubt on anything when they file for an individual and it is highly likely that they owe far less). Once you have filed and know how much you owe, you can review the tax settlement options and see what settlement method would qualify for (if any at all). Below is a list of different tax settlements offered by the IRS.

Settling Taxes for Less

·  Offer in Compromise

An offer in compromise is the most common settlement method individuals think about when it comes to settling with the IRS. Not only is this the most thought of method, but also the hardest one to qualify for. With an offer in compromise you will be required to make an offer to the IRS of an amount of money that you can afford to pay (payment plans available) and the IRS must be willing to accept that amount of money in order to wipe the remaining liability clean. When making the offer you will have to convince the IRS that the amount you offer them is equal to or greater than the amount that they would be able to collect from you through forced collections without forcing you into financial hardship.

·  Partial Payment Installment Agreement

A partial payment installment agreement allows the taxpayer to enter into an agreement with the IRS to pay back the taxes owed over a specified time and this amount can be less than the total amount initially owed to the IRS. This option is typically available to those individuals that cannot meet the minimum payment amount required with the normal installment agreement.

·  Penalty Abatement

Penalty abatement allows the taxpayer to eliminate all or part of penalties owed. Penalty abatement does not eliminate any of the base amount of tax owed, just penalties added onto that initial amount. This is one of the easier ways to settle taxes owed for less. The IRS uses penalties as a way to bully taxpayers and scaring them into paying sooner. The IRS does realize that there are times that the taxpayer has a legitimate reason for not paying or filing on time and they have created penalty abatement for this reason.

When You Can't Settle Taxes For Less

·  Installment Agreement

An installment agreement is the most common method for individuals to pay back IRS taxes owed if they cannot pay in full. Under this form of agreement the taxpayer is allowed to pay back the taxes they owe in monthly payments if they can pay off the entire amount owed in a three year period. This agreement is fairly easy to obtain if an amount of $25,000 or less is owed, if greater, a tax professional will be needed for assistance.

·  Uncollectible Status / Financial Hardship

This form of agreement puts the taxpayer off the hook temporarily until their financial situation has improved enough for the IRS to begin taking collection actions against them again.

Important Tax Settlement Notes

An important thing to know about the IRS is that they will continue to enforce collections on individuals even if they cannot pay. Even if these collections cause extreme financial hardship on the taxpayer the IRS will not stop until the taxpayer proves to the IRS that they cannot pay. The IRS is a very automated machine and collections can only be stopped by tax filings. The IRS does not intend to put individuals in severe financial hardship, their system just has no way of knowing without receiving a tax settlement filing. The IRS is very complex and it is advised to use a tax settlement professional when attempting to make a settlement with the IRS. Most tax professionals will be able to analyze your financial situation and know if you are a likely candidate for the settlement before any filings are done.

http://www.backtaxeshelp.com/tax-settlement.html

Shopping online is undoubtedly convenient, but there are times when picking up the phone can save you some cash or, at the very least, score you a nice upgrade.
"Having that human element really helps," says Laura Oliver, a deal expert who runs AFrugalChick.com and who has scored plenty of deals just by making a phone call. "If you call and it's not working, hang up and call right back," she advises. "The phone lines are on a queue. You've got 15 to 20 other people you can try."
She also points out it doesn't have to be you who does the haggling for a better price.
"You probably have someone in your house that's your best negotiator," Oliver says, advising consumers to let that person make the call.

Negotiate a Lower Credit Card APR
For people with average-to-good credit, the annual percentage rates associated with a credit card aren't necessarily set in stone.
"Call your credit card company and say "Card X just sent me an offer for a card with 0% APR for a year and then a fixed rate of only 12%, which is much lower than the rate I'm currently paying you," says Derrick Kinney, a financial adviser who specializes in helping families.
He says you should ask your current issuer if they can match the competing rate and, if not, it makes financial switch to transfer your current balance to take advantage of their competitor's better offer.
"The fear of losing your business will usually make them match the offer," Kinney says.

Call Your Cable Provider
Similarly, Oliver suggests calling up your cable company to ask if they'll match a lower rate being offered by a local competitor.
"These providers are having a hard time in the recession," she says, and they are not alone.
She says this tactic can be used on any provider, such as a home phone company or newspaper subscription service, which are known to offer 90-day trial services that don't immediately lock you into a contract.
Those who live areas with more than one cable provider should check out this step-by-step guide to bargain for better cable.

Get a Nicer Rental Car
Oliver suggests booking the cheapest rental car a company has to offer online and then calling up the bricks-and-mortar store where you will pick it up to see if they'll give you an upgrade.
"Sometimes, [store clerks] will give upgrades on the vehicle or offer a special discount that's not featured on the website because it's reserved for walk-ins," she says.

Inquire About Hotel Deals
Similarly, Oliver says that travelers can call a hotel's front desk a day or two before checking in to see if there are any rooms you can upgrade to for free. She says this is especially effective when you book directly through the hotel's website.

Talk to Your Retailer About a Refund
Just a day after MainStreet Staff Reporter Seth Fiegerman purchased a jacket from Banana Republic, fellow staff writer Matt Brownell found out the retailer was offering 30% off on all merchandise sold on its website. Fiegerman was able to get the store to retroactively apply the deal to his purchase simply by calling the retailer's customer service hotline and asking them to.
So anyone who thinks they've just missed out on a deal might be able to get in on the savings with one simple phone call.

Shop for a Car Over the Phone
Car dealers are known to keep customers inside dealerships for long periods of time in an effort to get them to commit to a purchase price. To avoid making a bad deal, car experts suggest negotiating over the phone or online.
"[Dealers] are very good at holding you hostage and not letting you go without purchasing the vehicle," Phil Reed, senior consumer advice editor for Edmunds.com, told MainStreet in May. "You need to be able to get in and out safely without committing."
That's not the only way to save money at the dealership.

Get a Car Insurance Agent to Come Clean
You should also call your car insurance agent to inquire about whether they are any discounts available that you aren't taking advantage of. "Some commonly overlooked discounts include programs that allow teens with high GPAs to save and programs that offer discounts to anyone who takes a defensive driving course," Merrick says. "Since it's cheaper for them to give you a discount than lose your business, most agents will tell you about the discounts."
Conversely, you can find out about one or two of the little things in life that can send your insurance shooting in the opposite direction in this MainStreet roundup of small reasons for big insurance hikes.

http://financiallyfit.yahoo.com/finance/article-113527-11073-1-8-phone-calls-that-will-save-you-money?ywaad=ad0035&nc