Back Tax Settlement - Settle With the IRS - Tax Settlement Help

IRS tax settlement in general can be defined as coming to an agreement with the IRS. Typically, when you hear about tax settlement on TV or online, most companies are referring to paying the IRS less taxes than a taxpayer truly owes. Is this possible? Yes. Is it likely? No. Here are a few ways a taxpayer may pay the IRS less than they truly owe:

IRS Penalty Abatement

You can find out more information on IRS Penalty Abatement. However, to quickly summarize, IRS Penalty Abatement is way for you to reduce or remove tax penalties you have incurred. This may be a penalty for paying late, filing late, underpaying, accuracy related problems on your tax return, and so forth. In either case, many IRS penalties can sometimes be reduced or abated as long as there is "reasonable cause," or good reasoning to the IRS as to why the penalties were caused in the first place. In any event, if you are able to abate tax penalties incurred, you have effectively settle a portion of your taxes owed.

IRS Offer In Compromise

You can find out more information on IRS Offer In Compromise. An Offer In Compromise, can be defined as a IRS program which gives certain Federal taxpayers with back taxes or tax debt, who meet certain requirements, to negotiate and pay less taxes than they owe--in essence clearing their tax liabilities with the Internal Revenue Service. An Offer In Compromise is a form of tax settlement and is typically what tax relief firms are referring to when they state you can settle for "pennies on the dollar." Realize that an Offer In Compromise has a who list of requirements that need to be met, and they a low percentage of acceptance.

Part Pay Installment Agreement

A relatively new mechanism for paying the IRS less than the total amount a taxpayer owes is through the use of a Partial Payment Installment Agreement. This is a type of IRS Installment agreement whereby you pay back the IRS taxes owed through consecutive monthly payments. Unlike a normal IRS Installment Agreement, as a portion of your tax debt becomes affected by the Statue of Limitations, that debt falls off. In summary, you end up pay less than the total amount you owed to the IRS. Therefore, this is a form of tax settlement where you can pay less than the original balance.