IRS Tax Debt Settlement
UPDATED: December 16, 2019
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We’ve all seen the television advertisements from companies claiming that they can settle Internal Revenue Service (IRS) tax debt for pennies on the dollar. Are these claims of tax debt relief simply too good to be true? Our tax law expert has the answer.
Justin Hein, Managing Attorney for Roni Deutch, A Professional Tax Corporation – a law firm that has been resolving IRS tax debts for American taxpayers for nearly 20 years – says that it’s possible to settle IRS tax debt for pennies on the dollar, but that it’s not a viable option for most taxpayers.
IRS debt relief: One size does not fit all
The IRS will base a tax debt relief resolution on each taxpayer’s unique financial situation. Since people don’t have cookie-cutter lives, no tax debt resolution program will work for everyone. If you contact a tax attorney at a reputable firm, you can get a free and confidential analysis of how the IRS will likely view your financial situation. Hein advises, “I would recommend that taxpayers who are interested in obtaining a tax debt settlement for less than they owe the IRS to work with an entity that does an analysis upfront to preliminary determine whether a person has any chance of qualifying for that tax resolution program, otherwise known as an Offer in Compromise.”
Tax debt relief: Know when to walk away
Taxpayers who contact a company that makes outrageous claims and promises IRS debt relief without even looking at their financial situation should question the company’s motives and know when to walk away. Hein explains, “If a company tells you that you qualify for a specific tax resolution program or other IRS debt relief without even inquiring about your financial situation, I think it's a pretty safe bet that you're about to be taken advantage of, and it's really not in your best interest to continue the conversation.”
Use a tax attorney when seeking an IRS debt settlement or IRS debt relief
While the IRS permits non-attorneys, such as enrolled agents and CPAs, to negotiate on behalf of taxpayers regarding their IRS tax debt, there are significant benefits for taxpayers in dealing with a law firm to obtain IRS tax debt relief rather than trying to deal with a CPA firm or enrolled agent. Communications between a taxpayer and a tax attorney are protected by attorney client privilege in all states and in all Federal courts – that is not the case with CPAs and enrolled agents or other tax preparers. Attorneys are trained to work up a client’s case and present the client’s case in the best possible light during negotiations about tax debt settlements and tax debt relief with the IRS. In addition, the IRS knows that attorneys can represent the taxpayer in bankruptcy proceedings if it comes to that, where as CPAs and agents can not do so. As such, taxpayers typically are best served by having an attorney negotiate on their behalf with the IRS.”