The #1 thing we hear in the world of taxes from people who are looking to resolve their tax problem is "can I get my liability lowered." Now sometimes this may mean they want to offer a lump sum or they may just want the penalties and interest waived.
The IRS has several guide lines that must be followed when doing either of these things. Both are dependant on each individuals case and the circumstance surrounding the details. The IRS does not like to waive anything so keep in mind the process will be detailed and take some time.
Penalty abatement (waiving the penalties and interest) needs to meet certain criteria to be considered by the IRS. The letters need to be submitted with the returns. There can be an appeal process to go through if denied. The process can take several months.
The offer in compromise (lump sum offer) is the other most commonly asked question. This solution is very detailed. The are many things to consider when looking at this avenue. The IRS will look at assets, ability to work in the future, statues on the liability, payoff dates, etc.... You will also need to put 20% of the lump sum down and $150 to start the offer process. Offers can also take several months to work through and will also extend you statue dates.
The best advice would be to seek help when trying to resolve any tax liability. The IRS has guidelines and rules that they will not volunteer when you call in. Their main goal is to get you into a payment plan to get the liability paid. Do research and get help. Putting it off will only make it worse and the IRS will not just go away.
Melissa, Effectur
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