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Any Accuracy To The Anecdotes About Neglectful People Who Resolve Back Tax Debt For A Small Fraction Of The Original Amount?
Yes, there absolutely is. This is not just the stuff of urban legend. It happens over and over through the use of a system that the feared Internal Revenue Service, themselves, has instituted to aid negligent tax payers settle back taxes. The program is known as an "Offer in Compromise", or more succinctly an "OIC". The IRS has been known to accept as little as one (yes that's right, the figure "1") per cent of an total to be paid on a tax allegation and call it even and done!
These OIC's are completely up to the government's judgement, as there is no legal right to have a valid tax balance diminished by the IRS. That being said, the IRS must give a accurately submitted Offer balanced judgment.
Consider the case of Henry who was living on a fixed income and found himself in arrears to the IRS for the sum of $13000. That's because a back tax bill can grow at a fast rate with all the additional fees, penalties and interest that they assign to it. These things take on a life of their own after a while. Henry did the smart thing and enlisted the help of a settlement services advisor to represent his case to the IRS. The settlement services advisor wrangled a huge reduction from the full amount of $13000, getting it whittled down to a manageable $2000! This was an amount that Henry could afford to repay and get back to his life without the IRS hounding him.
If this OIC thing is starting to sound like it could be the way for you, keep in mind that merely wanting to negotiate a deal with the IRS is not adequate of a criteria. After all, wouldn't everyman like to have his or her tax debt reduced? You first have to qualify for an Offer in Compromise by showing the IRS that one of these conditions exist:
What the IRS calls "Doubt as to Collectiblity". Simply put there is some qualm as to whether they can make a collection of the debt from you.
"Doubt as to Liability". There is some prudent doubt as to whether you owe the tax bill at all. This one is highly unusual.
Lastly, due to some mitigating circumstances, the payment of the full tax bill would cause you an economic hardship or would be unfair or inequitable.
The bottom line here is if you think you might qualify for one of these tantalizing reductions in your delinquent tax debt, you should try to find professional help in making the determination, and if a good case exists, engage them to represent you before the IRS. This is not something you want to do on your own. The adage from the law profession " he who acts as his own attorney has a fool for a client" would also hold good in going before the Internal Revenue Service with an Offer in Compromise.
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