How to Do an IRS Tax Settlement
Its a said but true fact that taxes are a necessary part of life. Its also true that they can easily add up to be more than you had previously expected come tax time. Having to pay additional taxes can sometimes prove to be a financial burden. However, in some instances you can make a settlement arrangement with the IRS to satisfy your debts.
What You'll Need:
- Computer with access to the Internet
- Form 656 & 656-B
- Contact the IRS as soon as possible to decide if your situation qualifies for a settlement. Visit the IRS online by visiting the IRS website at irs.gov (IRS). Select the contact link found in the upper right hand corner. This will provide you with access to telephone numbers, mailing addresses and local office locations for the IRS. However, if your tax liability is the result of an audit, you will need to contact your auditor. In order to qualify for an Offer in Compromise status, you cannot currently be involved in any bankruptcy proceedings.
- Make a settlement offer to the IRS. You can complete this step by submitting the Offer in Compromise, Form 656. If the form is not completed properly, the IRS will automatically reject your settlement offer. Ensure that you obtain Form 656-B, this is an instruction booklet with details on how to complete the form. You can call the IRS and request that this information be mailed to you or you can download them from the IRS website. You'll also need to include the $150 application fee. This fee can be waived due to income limitations by submitting Form 656-A.
- Frequently check the current status of your offer. The Offer in Compromise requires a thorough and detailed investigation that is performed by the Collection Division of the IRS. This process could take anywhere between six and 12 months before you receive notification as to whether your Offer in Compromise has been approved. You can contact the IRS directly to complete this step.
- Once your request has been approved, submit the agreed settlement payment. Dependent on your current financial ability, the IRS may require that you fulfill the offer in a one-time payment or arrange installment payments. If you agree to make installment payments, it is important that each payment is on time so that the offer does not become null.