Reduce IRS Tax Debt

How to Reduce IRS Tax Debt

Reduce IRS tax debt.  Taxpayers can reduce IRS tax debts and/or stop IRS collection efforts in a number of ways including:

  1. Installment agreement – the taxpayer repays IRS tax debt over up 72 months.  Pro– stretches out tax debt over a longer time period; Con – taxpayer pays the total tax debt plus interest (usually, 3% – 5% annually).
  2. Offer in compromise – the taxpayer makes a settlement offer to the IRS. Pro – If the IRS accepts the settlement offer, the taxpayer pays the settlement offer amount rather than the total IRS tax debt owed.  Con – the rules and forms related to offers in compromise can be complex, the IRS often takes 12+ months to rule on applications for an offer in compromise, taxpayer must disclose all income, expenses, assets and liabilities to the IRS.
  3. Currently Not Collectible Status – the taxpayer applies for relief from IRS collections including bank levy and wage garnishment based upon financial hardship and inability to pay the IRS tax debts.  Pro– the 10 year collection statute continues to run; temporary relief from IRS collection actions.  Con – the IRS tax debt continues to accrue penalties and interest; only temporary relief.

Stopping an IRS bank levy or IRS wage garnishment or releasing an IRS tax lien can be complicated.  Contact Chicago tax lawyer and CPA Brian J. Thompson at 773-307-0181 to reduce IRS tax debt.