IRS Tax Resolution

Mounting income tax problems as a result of economic woes are pushing more individuals, businesses, and corporations to the brink of financial ruin. Escalating unemployment, the unavailability of liquid assets, and higher interest rates can all contribute to domestic financial problems. As the United States faces uncertain economic times, more taxpayers are unable to meet federal and state tax obligations. When businesses fail, they can wind up owing Uncle Sam hundreds of thousands of dollars in unpaid corporate taxes. Individuals struggling to make ends meet may defer paying income or property taxes; some running the risk of losing homes and other real estate holdings. Bankruptcy may be a solution, but the consequences of such drastic action are long lasting and detrimental to efforts to obtain future financing. Unfortunately, income tax problems don't go away with bankruptcy. Delinquent federal and state taxes are not dischargeable under U.S. Bankruptcy law; and late penalties will continue to accrue. The longer taxpayers take to address IRS tax resolution, the more money they will owe to the government.

But contrary to popular belief, Uncle Sam is not a cold hearted bill collector. The average taxpayer is unaware of options available for resolving income tax problems. The federal government has payment options for cash-strapped taxpayers that will help resolve indebtedness. Information regarding IRS tax resolution can be found online at the IRS.gov website, by dowloading Publication 594, or by contacting a local IRS office for assistance in resolving tax matters. Delinquent taxpayers can download and submit a Form 9465 Installment Agreement Request to establish a monthly payment plan to whittle down outstanding taxes. IRS tax resolution requires that taxpayers submit financial statements, including income earnings and expenses to the government as proof of an inability to pay. Form 656, an Offer in Compromise (OIC), is a lengthy document the Internal Revenue Service allows delinquent taxpayers to submit in order to resolve past due payments. Bank statements, outstanding indebtedness to creditors other than the government, amounts of mortgage or rental payments, auto loans, student loans, and hospital expenses are all taken into account. IRS counselors review the Offer in Compromise to determine a lesser payment amount that will be acceptable to the federal government. However, the Offer in Compromise is limited to a specific term. Defaulting on the OIC annuls the agreement; and the delinquent taxes become due and payable, plus interest and penalties.

Worrisome income tax problems can also be resolved through a third party. Financial management companies that specialize in resolution can advise and represent delinquent taxpayers. Many of these companies claim that they can negotiate with the federal government for debt settlements at pennies on the dollars owed; but consumers should beware. Resolution firms which charge exorbitant fees are probably fraudulent; and IRS penalties and interest may continue to accrue. Legitimate IRS tax resolution firms will have certain requirements. Delinquent tax payers must have a steady and stable income and agree to make monthly installments through the debt resolution agency. The immediate benefit to working with a professional tax resolution firm is that IRS collection efforts should cease and all correspondence can be handled between the firm and the Fed. The government is prohibited from seizing bank accounts, personal property, or real estate holdings to satisfy delinquent returns, as long as an acceptable repayment plan is in place. A competent consultant firm will make a detailed assessment of the delinquent taxpayers financial status and determine the monthly payments proposed to the Internal Revenue Service, plus a financial management or consultant fee.

Financial management consultants may advise debtors to borrow funds from a bank, credit union, lending institution, or family member to satisfy outstanding tax payments and avoid incurring mounting interest and penalties. Borrowed funds may be repaid at a lower interest rate than the IRS assesses; and the pressure of undergoing collection proceedings is alleviated. Second home mortgages may be an option for homeowners to meet obligations, if the new mortgage does not exceed budgetary limitations. The Bible admonishes us not to defraud the government, but pay whatever is owed. "Is it lawful to give tribute to Caesar, or not? Shall we give, or shall we not give? But he, knowing their hypocrisy, said unto them, Why tempt ye me? Bring me a penny, that I may see it. And they brought it. And he saith unto the, Whose is this image and superscription? And they said unto him, Caesar's. And Jesus answering said unto them, Render to Caesar the things that are Caesar's, and to God the things that are God's. And the marveled at him" (Mark 12:14b-17).

For distressed taxpayers, the best advice is to consult with the Internal Revenue Service about how to resolve individual or corporate income tax problems. The very worse thing to do is nothing. Acting as if the indebtedness doesn't exist will only compound the problem; and delaying proposing a workable repayment plan will result in mounting interest and penalties. Financial management consultant companies exist which specialize in IRS tax resolution. Debtors can browse the Web to find reliable consultants or check out the local phone directory. Delinquent taxpayers can apply for resolution by submitting an IRS Offer in Compromise to petition for debt settlement. Debtors should investigate potential companies claiming an ability to negotiate settlements at a fraction of the original debt. If claims sound too good to be true, they probably are. Check the local Better Business Bureau, or visit websites for background information before committing to any agreement for financial services. The IRS website also includes accurate information about available taxpayer options and contact information for local branch offices.

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