Receiving notice from the IRS or state taxing authority that you owe back taxes can bring on much anxiety. Since it usually takes the IRS two years to verify tax returns, many taxpayers are surprised they made a mistake and shocked by the interest and penalties that have accrued. For many Americans, paying a large sum to the IRS all at once is not an option. The economic downturn of the last few years has left many with little savings and no disposable income. Logically, many wonder if IRS debt forgiveness is even possible. 

Options for Settlement

Unfortunately, the IRS does not negotiate with just anyone. You must qualify for one of several available programs. The group of qualifying taxpayers is narrow, however. The IRS limits its programs to individuals who are truly struggling and experiencing financial hardship. The good news is the IRS has expanded some of its programs in recent years, including the Fresh Start Initiative. Navigating the red tape, however, can be time-consuming, and as the process continues, your interest is building.

Consulting with a professional tax attorney can help you efficiently navigate this daunting process. Here's an example to illustrate all the variables at play. In years past, the IRS would determine a person's ability to pay by looking at their projected income over the next four to five years. The above-mentioned Fresh Start Initiative changed that to one year of projected income if the taxpayer agrees to pay the entire debt in less than five months, and two years of projected income if the debt is paid within six to 24 months. 

If the IRS determines your circumstances merit their consideration, there are two possible outcomes. 

• A Tax Settlement: This means the IRS or other taxing authority agrees to forgive part of your debt. But, you must pay the entire tax settlement within an agreed-upon period of time. During the time you are paying your debt, no interest or penalties will be assessed. Once a settlement is accepted, the IRS will view you in good standing as long as you are making your payments. 
• A Payment Plan: The IRS may reject your settlement proposal, but they will sometimes agree to a payment plan. 

Benefits of Settling

Going through the settlement process can be frustrating and time-consuming. However, it's in your best interests. Obviously, one huge benefit is that you could pay less, making your tax liability affordable. The quicker you get this settled, the cheaper it will be since you will not accrue any more late fees or interest. Additionally, the IRS aggressively pursues delinquent taxpayers. They can put a lien on your home or business, place a bank levy on your accounts or garnish your wages. Reaching a settlement will avoid any of these consequences.

Optima Tax Relief has some of the best tax lawyers in California on staff. These tax professionals specialize in tax issues and tax relief. Whether you owe the IRS or another taxing authority, let Optima Tax Relief help give you the peace of mind that comes with a fresh slate.