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Understanding Tax Resolution
Tax resolution is the process of implementing strategies and negotiations to resolve outstanding tax debts with the IRS. It’s a critical aspect of financial management that can help parties avoid harsh penalties and crippling interest rates.
Key Tax Resolution Strategies
1. Installment Agreement: This plan allows tax debtors to pay their tax balance in installments.
2. Offer in Compromise (OIC): A settlement agreement where the IRS agrees to accept less than the full amount owed.
3. Currently Not Collectible (CNC): A status granted to taxpayers facing financial hardships, where the IRS temporarily halts collection actions.
Picking the Right Tax Resolution Strategy
Choosing the right tax resolution strategy largely depends on your unique financial situation. Each of the mentioned strategies has its pros and cons. For instance, an Installment Agreement allows manageable payments, but interest continues to accrue on your tax debt balance.
In contrast, an OIC can significantly reduce your debt, but it requires a lump sum payment upfront and is harder to qualify for. Meanwhile, CNC provides temporary relief but does not solve the underlying problem of tax debt.
To make an informed decision, you need to understand these strategies and choose what aligns with your financial situation. The IRS provides a comprehensive guide to Tax Resolution, that can be a valuable resource in this regard.
Why Engage IRSProb?
Here at IRSProb, we are Texas-based tax attorneys who specialize in providing tax resolution services. We help taxpayers understand their options and develop strategies that work best for their specific situation. Reach us out today and find effective solutions for your tax issues.
