I have been paying IRS back taxes for three years and still owe over $30k. I pay $600 a month, debited from my bank account. I had been paying a lot more but it became burdensome. Due to interest at this rate it will take me several years to pay off. Is it possible to still negotiate the amount down some way? They also have a lien on my property.
A settlement with IRS is called an Offer in Compromise where you pay less than 100 cents for every dollar you owe and IRS forgives the rest. It will do this if it determines you are offering as much or more as it could collect from you through monthly payments or seizing your property.
The amount you have to pay is, to use the IRS jargon, is “an amount that represents the reasonable collection potential of the account.” This is a lump sum equal to what you could get from the equity in all your assets if they were sold at a quick sale, generally 80% plus 48 times what you could pay monthly on an installment agreement.
For example, if you had a car worth $10,000 and owed $5,000 on it and nothing else and IRS said you could make payments to IRS of $100 per month you would have to offer a lump sum of 80% of the $10,000 minus the $5,000 owed = $3,000 PLUS 48 times $100 = $4,800 for a total of $7,800 on whatever you actually owed. Your own affairs are likely to be more complicated.
In your case apparently you have the ability to pay $600 per month so if you had absolutely nothing else, the starting point for an offer would be a lump sum payment of $28,800. If this is not realistic then you are out of the game already.
on Mar 26th, 2009 at 1:21 am
Yes, everything is negotiable.
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on Mar 26th, 2009 at 1:36 am
Not really. The OIC program (Offer in Compromise) is based on your assets and ability to pay for the next 4-5 years. It probably won’t come out with a lower number than what you are currently paying.
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on Mar 26th, 2009 at 1:50 am
I think that if your situation has changed to a significant extent, then the IRS may consider reducing your monthly instalments.You should contact the person who you originally set up your offer & compromise.
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on Mar 26th, 2009 at 2:34 am
A settlement with IRS is called an Offer in Compromise where you pay less than 100 cents for every dollar you owe and IRS forgives the rest. It will do this if it determines you are offering as much or more as it could collect from you through monthly payments or seizing your property.
The amount you have to pay is, to use the IRS jargon, is “an amount that represents the reasonable collection potential of the account.” This is a lump sum equal to what you could get from the equity in all your assets if they were sold at a quick sale, generally 80% plus 48 times what you could pay monthly on an installment agreement.
For example, if you had a car worth $10,000 and owed $5,000 on it and nothing else and IRS said you could make payments to IRS of $100 per month you would have to offer a lump sum of 80% of the $10,000 minus the $5,000 owed = $3,000 PLUS 48 times $100 = $4,800 for a total of $7,800 on whatever you actually owed. Your own affairs are likely to be more complicated.
In your case apparently you have the ability to pay $600 per month so if you had absolutely nothing else, the starting point for an offer would be a lump sum payment of $28,800. If this is not realistic then you are out of the game already.
References :
I am an enrolled agent who specializes in representing taxpayers who owe a lot of back tax or unfiled returns. Your big mess is my ordinary day at the office. If you want additional help you can email through my profile.