Owing money to the IRS can be stressful, especially if penalties and interest make the debt feel unmanageable. Tax resolution services offer professional help to people in tax debt, often finding ways to reduce what they owe or make payments easier. Here’s how a tax resolution service can potentially save you money and help you get back on track financially.
1. Reducing penalties and interest
When you miss tax payments, the IRS charges penalties and interest that can quickly add up. Tax resolution professionals know how to negotiate with the IRS to reduce or eliminate some of these charges.
- Penalty abatement: for first-time offenses or due to reasonable cause, some penalties may be removed, significantly reducing your overall debt.
- Interest relief: although interest is usually harder to remove, a tax resolution specialist can still help lower your overall debt by minimizing penalties.
These savings can add up, especially for people facing high penalty fees, and can make the debt more manageable over time.
2. Negotiating an offer in compromise (OIC)
An Offer in Compromise (OIC) is a way to settle your tax debt for less than the full amount owed, but qualifying for an OIC is complex and not guaranteed.
- Specialist insight: tax resolution experts understand the criteria the IRS uses and can present a compelling case, maximizing your chances for approval.
- Savings potential: if approved, an OIC can reduce your debt by thousands, allowing you to pay a smaller amount.
This is one of the most direct ways tax resolution services can save you a substantial amount on your overall debt.
3. Setting up affordable payment plans
The IRS offers payment plans that allow you to pay your debt over time. While these can be set up on your own, a tax resolution service can help you find the best payment terms.
- Lower monthly payments: tax professionals understand how to negotiate a plan that considers your income and expenses, often resulting in lower monthly payments.
- Preventing additional fees: having a structured plan in place helps you avoid missing payments, which in turn prevents additional penalties.
By ensuring you’re on a payment plan that works for your financial situation, a tax resolution service helps you avoid future costs and manage payments without extra fees.
4. Helping with currently not collectible (CNC) status
If paying off your tax debt would prevent you from covering basic living expenses, you might qualify for Currently Not Collectible (CNC) status, which temporarily stops IRS collection efforts.
- Relief from payments: during this period, the IRS won’t expect payments, which can free up money for essential needs.
- No additional penalties: although interest will still accrue, CNC status can prevent other penalties from adding up.
A tax resolution service can help demonstrate your financial need, making it easier to qualify for this temporary relief status if you truly need it.
5. Preventing or releasing liens and levies
The IRS may place a lien on your property or a levy on your bank accounts to collect unpaid taxes, which can be financially draining and impact your credit score.
- Professional negotiation: tax resolution experts can help release liens or prevent them from happening in the first place, which can protect your assets and reduce additional financial strain.
- Preventing property seizure: by acting early, tax resolution services help prevent worst-case scenarios, which could otherwise add substantial costs.
Avoiding liens and levies saves money on potential legal fees and preserves access to your property and assets.
Tax resolution services don’t just help you with IRS paperwork—they can be valuable allies in finding ways to lower your tax debt and keep more money in your pocket. From negotiating reduced penalties and affordable payment plans to potentially securing a significant debt reduction through an Offer in Compromise, these services help take the financial burden off your shoulders. If you’re struggling with tax debt, a tax resolution service might be the solution that leads to real savings.
