On average, taxpayers only have to think about income tax, and all of the confusing forms and IRS terminology once a year.  But, if you find yourself with an unexpected tax debt and facing some possibly scary options, it’s a good idea to know what the IRS or state tax agency is talking about in all of those letters they’re sending you.  The first step is to secure the services of a reputable and experience tax relief firm.  Pending that, we will focus on a few of the areas of difficulty you may be having with the IRS or state, and shed some light on them.

The most common trouble a taxpayer is likely to get into with the IRS is owing more money than they can afford to pay.  The reasons are as diverse as the individual taxpayer themselves, but the goal, ultimately, is to make good on your tax debt for as little as you can.

One of the most sought-after instruments a tax resolution firm can implement is called an Offer in Compromise.  An Offer in Compromise is defined as a settlement agreement between the Internal Revenue Service and the taxpayer for an amount lower than what is owed.  The degree of tax relief one can expect to achieve will depend on a number of factors.  A tax attorney or tax resolution specialist can work with the IRS to bring the amount you will have to pay to as low a number as possible.

The first step is to demonstrate to the IRS that the taxpayer is either unable to pay what is due, or that they do not owe the amount being disputed in the first place.  In order to make the determination, the IRS will review the financial statements of the taxpayer in their entirety.  Absolutely no assets, expenses or income can remain undisclosed.  Once the taxpayer is deemed eligible for the Offer in Compromise, they can save a great deal of money and headache by avoiding garnishments, levies and other punitive action.

Understanding the Basics continues with the next entry:  Offers in Compromise, continued.

Disclaimer:  The information contained in this article is in no way intended for use as legal tax advice.  No assumption should be made that a tax attorney, enrolled agent or former IRS employee was involved in the creation of any content herein.  Advice on personal or business tax matters can be obtained by contacting Advanced Tax Help at (800) 970-8704, or by logging on to www.advancedtaxhelp.com