Are you tired of running from your tax debts? In actual fact, there are thousands of taxpayers all over America who are trying to ignore issues with regard to the Internal Revenue Service. This is not surprising when taking into consideration the intricacies involved in understanding all the bylaws and rules of taxes. However, you must realize that you can settle IRS tax debt and the lack of knowledge and unawareness of the law is not an excuse.
Is it Real?
If you’ve come across with claims about the option to settle tax debt, you are probably trying to uncover if it’s too good to be true. In reality, the program that those promotions and commercials are referring to is known as the OIC or Offer In Compromise option. It’s a method that permits taxpayers like you to furnish a lower amount than what you actually owe to the Internal Revenue Service, and settle for a particular percentage of your original debt.
You should understand though that more than 83 percent of the OIC cases are not approved by the IRS every year. This is for the most part brought about by underhanded firms misinforming people that they are eligible for something, which in the end is not truly the most appropriate option for them.
Offer In Compromise
To settle IRS tax debt, you can utilize a simple formula to find out if you’ll qualify. In reality, it is the actual formula that the Internal Revenue Service makes use of when deciding if they will approve your case or not. The initial part of the formula is your MDI or monthly disposable income. This is the amount of money that you leave every month after paying all of your necessary bills.
For instance, after paying all of your expenditures every month you still have $150. The IRS will seize that $150 and multiplies it by (2 years) 48 months, which will sum up to ($7,200). The second segment of the formula is any equity that you currently have in assets: property, homes, cars, IRAs, 401ks, etc. Assume that the only equity you have equals to $5,000. The following is what the formula will look like to settle IRS debt:
$7,200 + $ $5,000 = $12,500
What It Means
You will have to offer the $12,500 to the IRS. If you are in debt of less than $12,500, unfortunately, you will not be eligible for the Offer in Compromise program. The truth of the matter is; when you owe $9,500 to the IRS, if you apply for an Offer in Compromise, and they come to realize that the result was $12,500, you’ll have to pay them $12,500. That would be unfair on your part. Thus, if you plan to settle IRA debt, it is always best to consult a qualified tax expert to determine the most excellent solution for your situation.
Who to Trust
In the market full of services concerning tax resolution, the rule of thumb is to never transact with a company that will say you qualify even before they inquire about your finances in full detail. Seek assistance to settle IRS tax debt from a company that has good ratings and reviews from past clients.