• Do you qualify for OIC- Debt settlement is a popular method of debt elimination, however dealing with the IRS and owed taxes is an entirely different ballgame. In order to be eligible for an OIC, you must meet certain criteria which you can learn more about by visiting the IRS website. If you feel you are eligible per their guidelines, then you can consider working with a company that offers tax settlement services. By educating yourself first before moving forward you can reduce the chances of being scammed by a company that is not forthcoming with all the facts regarding the process.
• Company offers guaranteed results without questioning your situation- Be on the lookout for companies that promise guaranteed results, fast without even bothering to ask you some basic questions. Does the tax lawyer or “expert” confirm why you owe the taxes? Do they question your ability to repay the taxes in a traditional method? If they are not asking you the right questions, but are instead pushing for an OIC without considering other options, they are more than likely not interested in resolving your problem with the IRS. In order to truly help you with your tax problems they must understand the background information. Secondly, no one is able to predict how the IRS will respond, therefore anyone promising fast results without even meeting the taxpayer to learn more, is selling results they can’t possibly predict.
• Confirm physical locations- Telephones, fax machines and email have made it possible for most business transactions to require little or no physical meetings. This makes it possible for “dummy” companies to scam people without ever meeting them face to face. A legitimate company will have a physical address whereas con artists will set up locations that do not exist or they will not disclose their address. If you can’t meet with the people who are helping you resolve your tax problems, they are probably not conducting legitimate business services.
• Amount of cash deposit required- Tax attorneys, like other attorneys generally require some sort of cash deposit before they begin working on your case. This in itself is not a sign of a scam, however honest attorneys will estimate how much your case will cost and determine a fair deposit amount based on that figure. If you have already discussed your case with a tax attorney and shared how much cash you have available to work with, and the deposit matches that amount….proceed with caution. In general, it is best to avoid companies with retainer fees (if possible) in order to limit your risk.
• Unresponsive or changing representatives- You are dealing with a serious financial problem and need to have the ability to communicate with the person handling your case on a regular basis. If you find you are often waiting for replies or are dealing with company representatives that are constantly changing, the chances your case is being handled with the care and focus necessary to be successful are slim.

When it comes down to it, you have to use a bit of common sense and follow your instincts when considering a tax settlement company or attorney. Research the company prior to exchanging information and if you see red flags that just don’t seem right, continue searching until you find a company or person who you feel is competent in representing your case.

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1. Use Tax Experts Instead of a Debt Settlement Firm for Tax Problems

The IRS may tell you that it is best to put tax debt on a credit card as opposed to opting for a payment plan. While this may sound like a great idea, you do not want to jump the gun and listen to everything you hear.

There are a few reasons why it is not a good idea to put tax debt on a credit card. They include:

1. A higher interest rate than what the IRS offers. When you put your debt on a credit card you will probably pay more in interest than you would if you were to apply for an installment agreement. This is definitely true if you have bad credit and your interest rate is 15 percent or more. The IRS wants you to put the debt on your credit card so they get paid. Although it may benefit them, it does nothing good for you.
2. Once you move your debt to a credit card there is no way to settle with the IRS. Simply put, this debt is now on your shoulders and the IRS does not care what you do. As noted above, they push people towards credit cards because they get what they, the money. Before you decide on any option, no matter what it may be, you may want to attempt to settle your debt with the IRS. Remember, the moment that you pay with a credit card your chance for settling goes out the window. Do you really want to give up this right just so you can pay a high interest rate?
3. Service fees. The companies that accept credit card payments on behalf of the IRS, such as Link2Gov, are going to hit you with a service fee of 1.95 percent or more. And yes, this is on top of the interest that you will pay to your credit card company. “Paying your taxes with a credit card involves a relatively high fee between 1.95% – 3.93%. As a result, consumers should use a credit card only when they truly lack the money to pay their taxes in full and not for rewards or any other reason,” said Odysseas Papadimitriou, CEO of CardHub.com, a leading credit card comparison website.

These three details should show you why it is best to avoid paying your tax debt with a credit card. Although the IRS may suggest this, it is probably not in your best interest.

If you need help finding the best way to pay the IRS taxes you owe we can help. One service we offer is IRS payment plan help. We will analyze your financial situation and find the best solution that fits your needs, not the wants of the IRS.

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1. How an IRS Installment Agreement Could Hurt Credit if IRS Secures It
2. Child Care Tax Credit 2010: Qualifications for Dependent Care Credit
3. What If I Have a Tax Lien on My Credit Report? How Do I Remove?

If you cannot afford to pay your tax bill, follow this advice. It can save you a lot of money in additional penalties and interest that you would receive if you did fail to file:

1. File your taxes anyway. The last thing you want to do is pass by on filing your return because you know you cannot pay what you owe. This is not something that the IRS is going to look kindly upon – you must file no matter what. The harshest penalties that the IRS imposes is the failure to file penalty. The failure to pay penalty is much less than the failure to pay penalty.
2. Pay what you can. Sure, it would be nice to pay your entire tax bill in full so that your account is in good standing with the IRS. The only problem is that you may not have enough money to make this happen. In this case, you should pay as much money as you can. Not only will this reduce your liability, but it will also show the IRS that you are trying your best to pay. It is better to pay less than what you owe than nothing at all.
3. The IRS is willing to work with you. If you have a history of filing and paying on time the IRS will try to make things as easy on you as possible. For instance, if your tax bill is less than $25k you will probably qualify for an installment agreement. This allows you to pay your liability over many months, as opposed to all at once. But remember, you do not qualify for installment agreement unless you have filed your most recent return as well as subsequent ones from the past.
4. You will not fall any further behind. If you do not file your taxes and neglect to pay you have two things going against you. But if you at least file the only problem you are facing is how to come up with the money that you owe. If you are having trouble coming up with the money to be you can be assured that there are many different tax settlement methods offered by the IRS. The IRS ensures they offer settlement methods that can accommodate just about any taxpayer with just about any type of financial situation.
5. By paying as much as you can you may be able to avoid all or some penalties and interest. The longer you wait the more you will owe the IRS when you finally decide to come around. All penalties can be avoided if you set up some sort of agreement with the IRS prior to the taxes amount being due but you will always be liable for the interest that ads up on the outstanding tax amount.

If you do not understand your position and how to move forward, hire a tax professional. He can help you file your current tax return, as well as any you have missed in the past. Along with this, a professional knows what the IRS is looking for and can offer tips and advice on how to best deal with your situation in the future. At some point you will have to pay the IRS. It is always nice to have an expert on your side that can help you solve your problem while paying the least amount possible.

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1. What If I Didn’t File My Taxes or Request an Extension to File?
2. Why the IRS Will Find You If You Don’t File Your Taxes
3. Why File a Tax Return and the Benefits of Filing Your Taxes

So you can’t afford to pay your taxes right now? Its okay; the IRS has options for you. This is probably a more common occurrence than you actually think. The IRS literally handles thousands and thousands of taxpayers each year that cannot pay what they owe. You can be assured that the IRS will have a method available to you in order to stay in good standing with them, even if you can’t pay in full or even at all.  All you need to do is make the appropriate filing with them.

What is an Installment Agreement?

An installment agreement is an agreement between the IRS and the taxpayer that allows the taxpayer to pay back the taxes owed in monthly increments until the tax owed, plus interest has been paid off. An installment agreement is fairly easy to apply for. The good thing about an installment agreement is that once a taxpayer enters into this agreement the IRS will stop or will not charge any additional penalties on the taxes owed as long as payments are made on time and in the monthly required amount. It is best to setup an installment agreement at the time you know you cannot afford the taxes owed but you can still setup at anytime. This agreement is also a great way to remove or prevent the IRS from placing a lien and stops the IRS from enforcing a levy. It is important to make the required monthly payments because the IRS can then take tax collection actions against you if they choose.

Applying for an Installment Agreement

There are three different ways to apply for an installment agreement. It doesn’t matter which you choose they will all accomplish the same thing, just some are quicker than others.

1. Complete the Installment Agreement Request Form: IRS Form 9465
2. File on the internet at the following address: Online Payment Agreement Application
3. Over the phone by calling 1-800-829-1040. They will not set it up completely, but they will give you some guidance and them mail you forms afterward or tell you where to get on the internet.

If You Don’t Qualify for an Installment Agreement

If you do not qualify for an installment agreement it is because the IRS believes you will not be able to make the monthly payments or they believe you making the filing to stall collections or one of various other reasons the IRS can come up with. In that case you can ask if you can qualify for a partial payment installment agreement that will allow you to make lower monthly payments than those required with regular installment agreement. It is a good idea to talk with a tax professional if you can’t qualify because they can figure out the best method for you to resolve your tax problem with the IRS and ensure the IRS accepts it.

Related posts:

1. Why an IRS Installment Agreement Will Cost You More
2. Importance of Paying Your Installment Agreement On Time
3. Tax Installment Agreement: What You Need to Know