Settling your debt with the IRS may not be as daunting as it seems. Federal laws now grant the IRS the authority to agree to settle your debt for less than the actual amount you owe, even if it's a significant amount.
Note that you will not be able to settle with the IRS on your own, you will need to utilize the services of an accountant, tax lawyer or someone like HR Block to do your negotiating for you. Qualifying for the settlement procedure otherwise known as the 'compromise program' consists of several factors. If your tax debt is small in comparison to what you earn, they generally will not settle for a lesser amount. Commonly, there are three separate instances where the IRS has been known to agree to a debt settlement.
The first instance being that you can prove that the tax amount owed is incorrect or rather, a result of an IRS error. If that proves to be the case, the IRS will lower it to the correct amount. Of course, you will need tax professionals to assist the IRS in understanding their error. Second, if you can show that collecting the debt would place an insurmountable burden on you, the IRS may lessen the amount owed but again, even with professional help, proving this fact may be impossible. Third, if your tax debt is so large that even Warren Buffet couldn't pay it, the IRS may negotiate a settlement.
Remember that procrastination is not your friend when dealing with an IRS debt. Penalties and fees accrue daily and you should remember that the IRS wants to settle to if only that they want their money and they want it now. Don't be scared to look at all your options including talking to the experts such as HR Block to see if there is a way of lowering your debt. The IRS lives off people's fears of not paying the entire amount and indeed, makes a good deal of money of that scenario. Bear in mind, companies make human mistakes as well which means; you may not owe as much money as they say you do.
Settling with the IRS can be played on your terms if done correctly. Utilize the knowledge of a tax expert who not only knows the inner workings of the IRS but also knows the changing tax codes and laws. A good tax expert will be able to use that knowledge to get your tax debt down to a manageable level.