How Good is Your Tax Solution?

Resolving a tax debt can be time-consuming and frustrating, and once you have a solution in hand, you’re just happy to be done. However, have you obtained the most advantageous tax resolution available? While you might be in the best position possible, you might want to revisit the terms of your agreement with the IRS.

There are a number of tax resolutions, many of which are designed to afford you a comfortable means of resolving your delinquent balance. Simultaneously, there are certain resolutions you may have overlooked in your understandable haste to conclude your matter with the IRS. Consider the circumstances of your arrangement before you close the book for good on your IRS issue.

Installment Agreements

An installment agreement, or IA, allows you to pay the balance of your tax debt in monthly payments. This is an excellent example of a formal IRS resolution which enables you to reconcile your debt in financially manageable way. The terms of an installment agreement can vary, though, and the total of your monthly payment may be affected by factors such as your income, your location and the total amount of your debt. If you can comfortably afford your installment payments, there may be little reason to second-guess your resolution. If you’re struggling to meet your IRS obligation, though, it may be a sign that you’re in the wrong arrangement.

Currently Not Collectible

In the event that your tax bill payment is presenting you with a financial hardship, there may be an alternative solution. Currently Not Collectible status is granted to taxpayers who cannot afford even the cost of a monthly installment. This designation allows you to avoid both payment and IRS collection efforts until your financial situation improves. If this does not happen before the tax debt expires, you will likely not be held responsible for the debt. On the other hand, if you’re already in CNC status, you may still be keen to eliminate your tax debt. Assuming that you have no means of securing the funds necessary to make this happen, you’re probably already in the best situation possible.

Offer in Compromise

One option to consider and concurrently be wary of is an Offer in Compromise (OIC). This IRS resolution allows you to reduce, or settle, the total amount of your tax bill for less than what you actually owe. The caveat is that the balance will need to be paid in a matter of months in order to prevent forfeiting the agreement. An OIC can be tricky to qualify for and may take up to a year to either be rejected or approved. It’s important to note that the intervening time will be added to the life of your tax debt. If you’re denied after 10 months, these 10 months will be tacked on to your debt’s original expiration date.

A Second Opinion

Maybe the simplest way to determine if you’ve got the ideal tax resolution is to contact a licensed tax professional. The consultation will come at no cost to you and will, worst case scenario, reaffirm that you made the right choice in handling your tax debt. Alternatively, you may be eligible for an even better tax solution; one crafted by a seasoned tax professional.

 

From the Author: Your Tax Resolution Team

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