How to Do an IRS Tax Settlement
Taxes are a necessary part of life, but they can add up and be more than expected come tax time. Paying additional taxes may cause a financial burden on you. However, you can reduce the amount you have to pay by making a settlement arrangement with the IRS. While you may think you do not qualify, a settlement arrangement with the IRS may be feasible.
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Instructions
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Contact the IRS to determine if you qualify for a settlement. You can find contact information for the IRS by visiting the IRS website at www.irs.gov (IRS). Click on the contact link in the upper right hand corner and you will be able to access telephone numbers, mailing addresses and local office locations for the IRS. If your tax liability accrued due to an audit, you should contact your auditor. To qualify for an Offer in Compromise, you must not be currently in bankruptcy proceedings.
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Make a settlement with the IRS, by completing the Offer in Compromise, Form 656. If not completed properly, the IRS will reject your settlement offer, so you should obtain Form 656-B which is an instruction booklet on how to complete the form. The IRS can provide you with these forms, or you may download them from the IRS website. Additionally, there is a $150 application fee which may be waived due to income by submitting Form 656-A.
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Check the status of your offer. Because the Offer in Compromise requires thorough investigation by the Collection Division of the IRS, it could take six to 12 months before you know if your Offer in Compromise is approved. Contact your auditor or the IRS by phone at 1-800-829-1040 to check the status of your offer. For security reasons, you will need to provide them with your Social Security number.
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Submit settlement payment upon approval of the Offer in Compromise. Depending on your financial ability, the IRS may require you to make a one time payment or arrange installment payments. If you make installment payments, you need to ensure that the payments are on time so that the offer does not become null. Once the Offer in Compromise has been agreed upon, the IRS will immediately release any tax liens against your property that exist because of the tax debt.
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