How to Settle Income Tax With the IRS
You may have seen commercials on television for attorneys and tax preparation services offering to help people settle their IRS debt, but you probably thought that you would never need a service like that. The first thing to remember if you have an income tax debt: Do not panic. According to the IRS Tax Toolkit 2009, there are several avenues you can take to discuss your tax debt. The keys are to get organized and get help.
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Instructions
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Start collecting all of your income and tax information from previous years up to and including the year your debt with the IRS started. Taxes and penalties will be involved, and the IRS will have sent you notices updating you on how much you owe in taxes and penalties. Add to this information all of your current assets and your current income information, including as many pay stubs from your present job as you can.
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Hire a tax attorney to help you settle your debt with the IRS. Chances are you have never settled a debt with the IRS before, but a certified tax attorney has. Let him use his experience and knowledge to help you get the best possible deal in a settlement for your federal income taxes.
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Consider the deal your tax attorney gets, and determine whether you can pay it all at once or if you need to make a payment plan. The IRS will offer you an installment plan as long as you make your payments on time and do not default on the agreement.
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Keep very detailed records of your payments made, and keep all correspondence that comes from the IRS about your account in an expandable file folder. Make copies of all correspondence and keep the copies in a separate place for safekeeping.
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When you have made your last payment, send a letter of confirmation to the IRS letting it know that you have satisfied your income tax debt. Include your Social Security number and any account numbers the IRS assigned you for your settlement. Send the letter certified mail, as confirmation that you acknowledge that your debt has been paid. IRS records can get lost or confused, and having something to help indicate you had satisfied your debt could help.
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Tips & Warnings
Do not go it alone with the IRS. The IRS has made many changes in the way they do business, but it still requires paperwork and information you will be expected to know. Make sure you use a professional attorney to help you satisfy your IRS income tax debt settlement.
