How to Settle Your Tax Debt for Less Than You Owe
Bedford, NH Resident Seeks Help
Finding out that you owe the IRS a large sum of money in outstanding tax bills can be a very daunting
experience. For many, it can be difficult to come up with this unexpected amount. It is possible to
compromise with the IRS on the amount of outstanding taxes that you owe, finding an amount and
payment schedule that is more manageable. Using Form 433-A, you will provide information about your
finances, including income, assets, and investments. You will also note any outstanding debt and your
household’s monthly expenses. You will need to include supporting documents for this and a copy of
the completed Form 656. This form will outline the compromised resolution for your tax debt, including
whether this will be paid as a lump sum or monthly payments.
A Bedford resident was shocked to find that she owed thousands of dollars in outstanding tax bills.
Concerned about how she would pay this sum, she contacted Merrimack Tax Associates for assistance.
Requirements for Presenting a Tax Debt Compromise
To be eligible to file the above-mentioned forms and propose a compromise to the IRS to settle
outstanding tax debt, the filer must have filed their taxes before the tax deadline for the tax year in
question. If self-employed, quarterly taxes must have been paid on time throughout the tax year. Along
with the forms and compromise offer, you will need to include a $205 non-refundable application fee.
You will also need to enclose 20% of your total offer as outlined in the compromise if paying a lump
sum. If the offer is monthly payments, the first payment should be included when mailing in the form.
Acceptance or Rejection from the IRS for Your Compromise
If the IRS accepts your compromise, then they will follow up with payment instructions for the
remaining balance or with information on sending monthly payments. The IRS may reject your
compromise. This is often because the debt is too high based on the offer. If rejected, you have 30 days
to file an appeal.
With the help of the Merrimack Tax Associates team, the Bedford resident was able to draft a
compromise for this outstanding tax debt that was accepted by the IRS.