Tax Settlement Services
Resolve your tax debt with our expert tax settlement services. Our team of experienced tax professionals works to negotiate and settle your IRS or state tax liabilities for a fraction of what you owe, helping you regain financial freedom. Contact us today for a free consultation!
Key Benefits:
- Reduce your tax debt
- Avoid wage garnishments and liens
- Peace of mind with professional representation
Contact Us:
Phone: (877) 777-7430
Website: www.taxfortress.com
Is it possible to settle your tax debt for less than you owe? Any individual or business owner who owes taxes to the IRS or the state asks themselves this question at one time or another. You have probably seen ads on TV and the Internet about settling your taxes for “pennies on the dollar.” They include a lot of attractive language, flashy graphics, and a firm entreaty to “Call Now!” They look too good to be true. Are they?
While many of these tax settlement service providers may not be reputable themselves, the idea of settling state or federal tax liabilities for less than you owe is quite real. The ads give you a grandiose idea of what can actually happen. These slick marketers want you to open your wallet and pay them before they even take a look at your financial situation. Benjamin Franklin once said, “Half the truth is often a great lie.” You need to look deeper into your specific situation, how the tax agency views it, and get help from a qualified legal professional if you want to make a difference in your tax debt.
As Benjamin Franklin once said, “half the truth is often a great lie.”
Qualify for Tax Settlement Services
If a company claims that they can settle your tax debt without asking any specific details about your case, income, living expenses, and assets, it is in your best interest to run the other way as quickly as possible. However, you may still qualify to settle your taxes for less than you owe.
The detailed answer to this question could fill a 600-page book because the tax authorities make things as complicated and convoluted as possible. They want to make it very difficult for you to figure out if you qualify for a tax settlement. After all, the IRS and state tax agencies want as much money as possible. You need someone on your side who actually understands the intermixed, crisscrossed, and puzzling rules and can explain them to you in a way that makes sense. It is not enough to make wild claims like “pay pennies on the dollar.” The right professional will actually help you understand every step of the way.
If you add in the taxing authority employees who misinterpret or try to bend the truth about complicated tax settlement rules and procedures, you end up with a very low overall settlement success rate. However, this does not necessarily mean that you cannot get a settlement in the end.
Five years ago, the IRS only accepted settlements for about one-third of all tax liability cases, and the number has not changed much since then. The IRS calls this an Offer in Compromise. That means that the taxpayer ends up shelling out less money than they originally owed. This low percentage doesn’t surprise me. I have come across quite a few taxpayers who attempted to settle their own tax debts never to get past the initial screening phase. The IRS rejected their offers simply because they did not follow standard settlement procedures like completing the forms correctly and fully.
How then do you increase your personal chances of getting a settlement offer accepted by the IRS? A competent and ethical tax relief professional on your side can help. The right expert knows what it takes to achieve a settlement and can pursue the resolution strategy only if it has a high chance of working for you. They can help figure out if the taxpayer is a good settlement candidate before starting the process.
In my experience as one of these tax relief professionals, I have increased the percentage of IRS settlement acceptance to 75%. At the same time, I have settled taxes for significantly less than they originally owed liabilities. These savings can range from $20,000 to as high as $1 million. The majority of my unsuccessful settlements happened because the clients failed to comply with tax laws during the settlement review process. The IRS automatically rejects offers from anyone who does not follow the law, of course. While I must legally disclaim that past successes do not guarantee future results, I consider them a good indication of my expertise and dedication to the task of getting a settlement offer accepted by the IRS.
In 2019, the IRS’ overall tax settlement acceptance rate was only ~33%. See https://www.irs.gov/pub/irs-prior/p55b–2020.pdf, page 58. In IRS speak, the IRS calls settling taxes for less than the amount owed an “Offer in Compromise.”
This ~33% tax settlement acceptance rate does not surprise me. I know a few taxpayers who attempted to settle their own tax liabilities only to not even get past the initial screening phase (basically, the taxing authorities usually reject an offer if the taxpayer did not follow settlement procedures such as completing the government settlement forms correctly).
In regard to the overall low success rate, a competent and ethical tax relief professional should have a much higher tax settlement success rate because a good professional knows what it takes to achieve a settlement and should pursue a settlement resolution strategy only if she or he determines the taxpayer is a good settlement candidate.
In my own experience as a tax relief professional, I successfully reached a settlement in about 75% of the settlements I have attempted (I have settled taxes for significantly less than owed for liabilities ranging from as little as $20,000 to as high as $1,000,000). A majority of my unsuccessful settlements resulted because my clients failed to comply with the tax laws while my settlement proposal was under review (the taxing authorities will reject or return a settlement offer if a taxpayer fails to comply with the tax laws). I should mention (legal disclaimer) that my past performance may not be indicative of future results.
To illustrate why having an experienced tax professional is often a wise decision, I will share a few real-life examples of my experience settling tax liabilities.
My first example involves a non-profit business client of mine that previously hired a local attorney to try to settle its ~$230,000 IRS tax liability. The IRS rejected the local attorney’s settlement offer (I suspect that the local attorney did not have a lot of experience settling tax liabilities).
Following rejection of the local attorney’s settlement offer, the non-profit hired me to file an appeal in response to the IRS’ rejection.
Importantly, the non-profit business showed more than enough positive cash-flow to fully pay its tax liability before the collection statute of limitations expired. With this positive cash-flow in mind, I began to think about how I could persuade the IRS agree to a settlement.
When I filed my appeal, I argued, among other things, that the IRS should settle the tax liability for less than owed because the non-profit provided valuable charitable services to its community (I showed how other businesses in the community excluded the specific individuals that my client catered to).
In the end, I convinced the IRS Appeals Office to settle the ~$230,000 tax liability for ~$30,000 (thirteen cents on the dollar).
Another example involves a business that owed ~$600,000 in IRS back taxes.
During negotiations, the IRS employee (called an “Officer Specialist”) attempted to violate the tax laws by rejecting to settle solely based on the fact that the business operated at a loss for the last five years (this IRS employee also failed to contact me despite my numerous messages).
I filed an appeal in response to the IRS employee’s erroneous rejection explaining how the IRS employee, who appeared to act in bad faith, violated the law by failing to consider any other facts and circumstances of my client’s case (the tax laws require the IRS to treat taxpayers equitably and fairly).
I convinced the IRS Appeals Office to settle the ~$600,000 tax liability for ~$25,000 (about four cents on the dollar).
As another example, a business had racked up almost $1,000,000 in IRS employment taxes.
In preparing my offer settlement narrative, I explained, among other things, how circumstances beyond the taxpayer’s control prevented taxpayer from paying its expenses including its employment taxes (I provided credible proof such as economic statistics from the local government agency and the federal government agency). Further, I went on to explain with supporting evidence how the economic business cycle presented a material risk to my client’s cyclical business (among other factors, the IRS considers a taxpayer’s prospects of earning more income when determining whether to settle).
Without having to file an appeal, I settled this ~$1,000,000 tax liability for ~$60,000 (six cents on the dollar).
As one last example, an individual accumulated ~$100,000 in federal income taxes over a nine-year period.
During settlement negotiations with the IRS, I argued, among other things, that the taxpayer failed to pay his federal income taxes over the nine-year period because he would have suffered an economic hardship meaning he could not pay his basic living expenses (I showed through bank statements and other supporting documents that was the case). In addition, I showed my client’s income for the current year was less than the previous year.
Without having to file an appeal, I settled this ~$100,000 tax liability for ~$600 (less than one cent on the dollar).
I could continue with other examples, but I think you get the picture—each settlement case presents its own unique challenges.
Tax Debt Settlement Services
To demonstrate why having an experienced tax professional is usually the right decision, consider these following real-life examples of my past experience settling large liabilities.
A nonprofit organization client of mine had a tax liability of around $230,000. They had hired a local attorney to try to settle this for a lesser amount, but the IRS had already rejected the offer. It is my suspicion that the small-town attorney did not have a lot of experience with federal tax liability cases. After this rejection, the nonprofit turned to me to handle the appeals process.
It is important to note that this organization had more than enough positive cash flow to fully pay the tax liability before the collection statute of limitations expired. With this in mind, I began to formulate a plan to convince the IRS to agree to a settlement.
When I filed the appeal, I included arguments that the IRS should settle the tax liability for less than owed because the nonprofit provided the community with valuable charitable services. I did this with specific and direct examples of other businesses or organizations in the community excluding the specific individuals that my client helped.
In the end, I convinced the IRS Appeals Office to settle the tax liability of approximately $230,000 for just $30,000. The nonprofit organization ended up paying just $0.13 out of every dollar originally owed.
Another example of my past settlement successes involved a company that owed $600,000 in tax debt to the IRS. During these negotiations, an Offer Specialist at the IRS attempted to violate tax laws by rejecting to settle solely based on the fact that the business operated at a loss in the last five years. They also failed to contact me despite numerous messages.
I immediately filed an appeal in response to the IRS’s erroneous rejection. I explained how the employee had violated the law, acted in bad faith, and did not treat the taxpayer fairly or equitably. With this and other details, I convinced the IRS Appeals Office to settle the $600,000 tax liability for just $25,000, an even bigger savings than in the first example.
Finally, an even higher value example involved a business with $1 million in IRS employment tax liability. They ended up paying about $60,000 instead of that total amount. How did I do it? When preparing my offer settlement plan, I explained how circumstances beyond the taxpayer’s control prevented them from paying its expenses including employment taxes. I was able to provide documented proof that included economic statistics from the local government agency and federal economic information as well. I also explained with supporting evidence how the economic business cycle presented a material risk to my client’s cyclical business. Among other factors, the IRS considers a taxpayer’s potential ability to earn more income when making their settlement determination.
Even individuals who owe less can get great settlement offers with the help of a professional tax relief expert. One client owed approximately $100,000 accumulated over nine years. While the IRS wanted payment in full, I argued that the taxpayer did not pay his federal income taxes because he would suffer an economic hardship that left them unable to pay for basic living expenses. In order to do this, I shared bank statements and expense-related documents. In addition, I showed that the client’s income for the current year was considerably less than in past years, which further hampered their ability to pay.
In the end, the IRS accepted a settlement of just $600.
I have accumulated so many examples like this over my years of experience, but I think these are sufficient to demonstrate the possibilities. While each settlement case presents its own unique challenges, there are frequently options to explore that can save the taxpayer a considerable amount of money.
Tax Debt Settlement Services
Although these examples sound very impressive, and the increased percentage of settlement offers accepted with the help of a professional gives you some peace of mind, it is important to know that settling tax liabilities isn’t easy. The taxing authorities try everything and anything to reject an offer and get as much money as they can. They take a lot of time to go over everything meticulously and find mistakes or things left out that they can use to reject the offer. It can take 6 to 8 months or more trying to reach a settlement.
This length of time and the difficulty of the process often deters taxpayers from even trying. These are the harsh truths that most of the slick “settle for pennies on the dollar” advertisements do not mention.
To sum everything up, the simple answer regarding tax settlements is that a competent and experienced tax relief professional needs to know the facts of your individual case before they can tell you whether you qualify to settle your taxes for less than you owe. You may have seen a lot of marketing and online articles or heard from people you know that you simply need to show that you cannot pay her taxes in full in order to settle for less.
This is unfortunately only one tiny piece of the 100+ other pieces of the puzzle that are considered to determine if you qualify for a settlement. At one end of the spectrum, certain taxpayers will have their settlement offers accepted by the IRS quite easily. This can occur whether the taxpayer can pay the taxes in full before the collection statute time expires or not. At the other end of the spectrum, some tax authorities will not settle, especially for businesses, if income or profits keep rolling in.
Both federal and state taxing authorities have complex and challenging settlement rules and procedures. You need to speak with a reputable and competent tax relief professional to determine whether you qualify for tax settlement first. If you are, in fact, a good candidate, this same expert who has spent years handling tax collection cases can stand by your side and negotiate the settlement on your behalf. This alone can make the difference between an accepted settlement and rejection that leaves you in worse financial straits than you were before. It can also result in a settlement that is tens or even hundreds of thousands of dollars less than your original tax liability or any amount you could have reached by doing everything on your own.
For further reading on IRS tax settlement processes, you may find it helpful to visit the IRS Offer in Compromise Program page or consult the Consumer FTC – Tax Relief Companies to learn more about the potential risks of tax relief companies.
If you would like to learn how my firm, Fortress Tax Relief, can help with your tax liabilities—and whether you qualify for a tax settlement–pick up the phone and give us a call. We have caring and knowledgeable tax professionals who would be happy to answer any questions you have and to outline a solution tailored to your specific circumstances. We do not accept all cases, and we may be able to steer you in the right direction if another firm or professional is a better fit for your needs. There is no charge for a telephone consultation, so give us a call!
