Abraham Lincoln, the President of the United States, established the Internal Revenue Service (IRS) in 1862. It is a federal agency of the United States that is in charge of revenue collection and the enforcement of tax laws in the country. This agency reports to the United States Department of the Treasury and is responsible for collecting individual and employment taxes. A tax debt is created when you fail to pay the tax balance reported on your federal income tax return in full by the due date. The IRS can levy fines and interest on that obligation, which will accumulate until you pay it off. The IRS will issue you notices for payment that will become increasingly urgent. The IRS will sometimes entertain an offer in compromise, which permits you to pay a reduced amount of what you owe in back taxes.
Courts recognise four typical “reasonable collection alternatives”: full payment, an instalment plan, an offer in compromise, and a brief delay in collection. While instalment agreements and offers in compromise (OIC) are alternatives to settle your tax burden, payment in full implies exactly what it sounds like. You can ask for an instalment agreement if you have filed all of your taxes on time, your debt is manageable, and you only need a little more time to pay it off. You can use this approach to pay off your debt by making monthly payments. To set up the plan, you will need to pay a charge. You will also need to pay interest and a late penalty.
It is in the IRS’s best interests to collect taxes on behalf of the government efficiently, to encourage voluntary compliance, and to promote acceptable justice and uniformity. To that end, the IRS tax debt does enable some taxpayers to negotiate their debt in order to benefit both the IRS’s collection aims and the taxpayer’s realistic ability to pay. Although the IRS does not often erase debt, they are eager to bargain. As a result, debt settlement and resolution remain valuable assets for taxpayers seeking much-needed assistance for their position.