Randolph Law Firm, P.C.

Work with experienced attorney to secure installment plan, Offer in Compromise for tax debt, P.1

Last month, the IRS began a new program in which the agency is using private debt collection agencies to help collect on tax debts. The new program is, for now, targeted at taxpayers who are considered difficult cases—particularly those who have been contacted by the IRS multiple times in previous years but have not cooperated.

Taxpayers will be able to recognize when their debt is assigned to a private debt collector when they receive a notification letter from the IRS that their debt has been assigned to one of four private firms and the private firm subsequently sends their own collection letter. All money is supposed to be paid to the IRS rather than the debt collection agency. There is a certain amount of concern about taxpayers falling for scams, so taxpayers should be aware of this. 

The private firms working with the IRS have been authorized by the IRS to discuss payment options with taxpayers. Many of the taxpayers who are going to be contacted by these firms will benefit from learning about payment options, and should take advantage of alternative approaches to resolving tax debt when appropriate.

For those who are unable to immediately resolve tax debt, it may be possible to qualify for an installment agreement with the IRS. This involves making monthly payments to the IRS until the debt is paid in full. Once the debt is fully paid, the taxpayer is not obligated to pay penalties and interest, and the fee for setting up the agreement. A taxpayer must file all required tax returns before he or she can qualify for a repayment plan.

Another potential option for certain taxpayers is to make an Offer in Compromise. We’ll say more about this in our next post, and how an experienced tax attorney can help a taxpayer gain relief from unfair or burdensome tax debt.

Source: IRS, Payment Plans, Installment Agreements, Accessed June 9, 2017. 

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