IRS Tax Debt Settlement

UPDATED: Jul 14, 2023Fact Checked

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Mary Martin

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Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

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UPDATED: Jul 14, 2023

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UPDATED: Jul 14, 2023Fact Checked

We’ve all seen the television advertisements from companies claiming that they can settle Internal Revenue Service (IRS) tax debt for pennies on the dollar. Are these claims of tax debt relief simply too good to be true? Our tax law expert has the answer.

Justin Hein, Managing Attorney for Roni Deutch, A Professional Tax Corporation – a law firm that has been resolving IRS tax debts for American taxpayers for nearly 20 years – says that it’s possible to settle IRS tax debt for pennies on the dollar, but that it’s not a viable option for most taxpayers.

IRS debt relief: One size does not fit all

The IRS will base a tax debt relief resolution on each taxpayer’s unique financial situation. Since people don’t have cookie-cutter lives, no tax debt resolution program will work for everyone. If you contact a tax attorney at a reputable firm, you can get a free and confidential analysis of how the IRS will likely view your financial situation. Hein advises, “I would recommend that taxpayers who are interested in obtaining a tax debt settlement for less than they owe the IRS to work with an entity that does an analysis upfront to preliminary determine whether a person has any chance of qualifying for that tax resolution program, otherwise known as an Offer in Compromise.”

Tax debt relief: Know when to walk away

Taxpayers who contact a company that makes outrageous claims and promises IRS debt relief without even looking at their financial situation should question the company’s motives and know when to walk away. Hein explains, “If a company tells you that you qualify for a specific tax resolution program or other IRS debt relief without even inquiring about your financial situation, I think it’s a pretty safe bet that you’re about to be taken advantage of, and it’s really not in your best interest to continue the conversation.”

Use a tax attorney when seeking an IRS debt settlement or IRS debt relief

While the IRS permits non-attorneys, such as enrolled agents and CPAs, to negotiate on behalf of taxpayers regarding their IRS tax debt, there are significant benefits for taxpayers in dealing with a law firm to obtain IRS tax debt relief rather than trying to deal with a CPA firm or enrolled agent. Communications between a taxpayer and a tax attorney are protected by attorney client privilege in all states and in all Federal courts – that is not the case with CPAs and enrolled agents or other tax preparers. Attorneys are trained to work up a client’s case and present the client’s case in the best possible light during negotiations about tax debt settlements and tax debt relief with the IRS. In addition, the IRS knows that attorneys can represent the taxpayer in bankruptcy proceedings if it comes to that, where as CPAs and agents can not do so. As such, taxpayers typically are best served by having an attorney negotiate on their behalf with the IRS.”

Case Studies: IRS Tax Debt Settlement

Case Study 1: John’s Tax Debt Settlement

John, a self-employed individual, found himself facing a substantial IRS tax debt due to several years of financial hardship. He sought the assistance of a reputable tax attorney who conducted a comprehensive analysis of his financial situation. The attorney determined that John had a chance to qualify for an Offer in Compromise, a tax debt resolution program.

Case Study 2: Sarah’s Cautionary Tale

Sarah received a phone call from a company claiming they could magically eliminate her IRS tax debt without even considering her financial situation. Recognizing the red flags, Sarah wisely walked away from the conversation. She understood that legitimate tax debt relief requires a thorough assessment of her unique circumstances. Sarah sought a tax attorney’s for personal guidance, leading to successful navigation.

Case Study 3: Benefits of Using a Tax Attorney

Mark, an individual struggling with IRS tax debt, decided to hire a tax attorney rather than a CPA or enrolled agent. The attorney skillfully represented Mark during negotiations with the IRS, leveraging their knowledge of tax law and expertise in building a strong case. Mark’s attorney secured a favorable IRS tax debt settlement, protected by privilege, aligning with his financial situation.

 

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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