To settle a tax debt, the IRS or a state taxing authority such as the Maryland State Department of Assessments and Taxation or the District of Columbia Office of Tax & Revenue require from the taxpayer to demonstrate that tax debt is not collectible or that the taxpayer is not liable for the tax. The IRS and the state taxing agencies are in the business of collecting taxes not forgiving them. Therefore, proving to the IRS or to a state tax authority that the tax should be settled for an amount smaller than the original assessment is no easy matter.
Sometimes, the best way is to argue that the taxpayer is not responsible for the tax liability. For example, the IRS occasionally holds business owners personally responsible for business taxes such as sales tax or payroll tax. A business owner may want to challenge the IRS by arguing that he is not personally liable for the tax debt of the business. This may be done by filing an offer in compromise based on doubt as to liability. In other cases, a taxpayer is not challenging the fact that he is in fact liable for the tax debt. Instead, his argument is that his financial situation limits his ability to pay the entire tax and asks the IRS to reduce his tax burden based on doubt as to collectability.
Negotiating tax debt settlements with the IRS or with state taxing authorities is a delicate matter and requires tax law expertise and intimate familiarity with the IRS’s rules and regulations. Investing in expert tax advice can save you both the stress of dealing with tax collectors and also result in large tax savings.
If you want to settle your tax debt, contact our tax settlement lawyers. We can help you negotiate a favorable resolution to your tax debt problem.