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Benefits of a Tax Settlement

You might be wondering, “What exactly is a tax settlement?” It’s an agreement with the IRS or state tax authority that allows you to pay less than your full tax debt. Typically, settlements are considered when circumstances make it impossible to pay the full amount owed.

Negotiating a tax settlement can provide two main advantages:

Lower Your Tax Liability

You might be able to settle your federal or state taxes for much less than the total owed. Certain requirements must be met, but once the settlement is approved and completed, your account will be fully resolved and free from penalties.

Protect Your Finances

Settling your tax debt can prevent further penalties, liens, or wage garnishments, helping you regain control over your financial situation.

Keep in mind, negotiating a tax settlement is not always straightforward, and not every case qualifies.

How to Negotiate an IRS Tax Settlement

Millions of taxpayers face IRS debt each year. It’s nothing to be ashamed of, but ignoring it can lead to penalties, liens, and wage garnishments. If you owe taxes and can’t pay in full, there is hope.

In some cases, the IRS allows negotiation for a lower amount or extended payment plans. For example, a $30,000 tax debt could be settled for $10,000, payable as a lump sum or in monthly installments. Certain steps must be completed before finalizing a settlement.

File Any Unsubmitted Taxes

Submit all unfiled returns as soon as possible. The IRS won’t consider a settlement if returns are missing. Amend any IRS-created Substitute for Return (SFR) as needed.

Choose Your Settlement Type

Several settlement options exist, including:

Offer in Compromise (OIC)

The most popular option, though approval is challenging. If accepted, you may pay 20% upfront with the remainder in equal payments over 5 months (lump sum) or in periodic installments lasting 6–24 months.

Partial Payment Installment Agreement

Make monthly payments over several years. Taxes may expire due to the statute of limitations, effectively reducing the total amount owed without formal negotiation.

Penalty Abatement

Reduces tax debt caused by penalties. You must show valid reasons for late payment or filing. Approved abatements remove some or all penalties.

If none of these apply, you can consider a regular payment plan or check if you qualify for uncollectible status.

Submit Your Application

Completing the application can be complex, requiring forms, documentation, and fees. While you can apply independently, working with experienced professionals increases your chance of success. Sky View Tax Resolution has saved clients millions and strives to secure the best settlements possible.

After submission, the IRS reviews your application and makes a decision. If approved, you are considered in good standing for the covered period. Breaking the agreement may revoke that status.

Frequently Asked Questions About Tax Settlement

Are tax settlement companies legitimate?

Some tax settlement companies are trustworthy, while others are scams. Fraudulent companies often promise quick resolutions for pennies on the dollar without understanding your financial situation or tax debt.

Reputable companies first assess your current tax situation to determine if a resolution, such as an Offer in Compromise, is achievable. They are transparent about fees and employ experienced tax professionals, including CPAs, EAs, and tax attorneys.

Sky View Tax Resolution goes further than just advising on tax settlements. Our professionals evaluate your financial background, outline available resolution options and fees, and handle the process on your behalf.

Will the IRS agree to settle my tax debt?

We can’t answer this without understanding your financial situation. You can schedule a free, no-obligation consultation to provide the information we need to determine the best path for settling your IRS tax debt.

Can state taxes be settled too?

Like the IRS, state tax authorities may consider settlements for those unable to pay their taxes in full. Sky View Tax Resolution can assist with both federal and state tax settlements.

Can I settle my tax debt on my own?

Yes, you can attempt it yourself. However, the process is complex, with detailed paperwork and strict documentation requirements. The IRS requires proof that you qualify, including evidence of financial hardship.

If paying your taxes is a challenge, consulting a tax professional may be wise. Companies like Sky View Tax Resolution have the expertise to review your options and handle the process efficiently to achieve the best possible resolution.

Tax Settlement