Tax settlement is frequently talked about by many who are contemplating using it to resolve their problem with the IRS, but nobody has a clear idea of how it works. Everything they’ve heard is shrouded in ambiguity. Debunking common tax myths is what we’ll be doing in this blog. Let’s clarify some fallacies about tax settlement and explain how it operates.
Myth 1: Tax Settlement Pays Pennies of the Dollar
You can’t bargain with the IRS to pay only a portion of your debt. That’s a misconception about tax settlement, and it comes from the marketing strategies of tax relief companies that promise to settle tax debts for “pennies on the dollar.” However, the IRS does offer a program that enables taxpayers to settle for less than the amount owed, but qualifying for it is difficult. The majority of taxpayers who apply are often rejected.
Myth 2: Tax Settlement Can Be Done on Your Own
The tax code is extremely complex, and the IRS has protocols for settlements. To presume that one can handle a tax settlement personally might be a step in the wrong direction. You could miss out on chances to lower the debt or make mistakes that would complicate the process without a tax professional’s help.
Myth 3: Tax Settlement Will Ruin Your Credit Score
People think that paying off a tax debt will negatively affect their credit score. Credit bureaus are not notified by the IRS of tax debts or settlements. This is one of the tax myths debunked that all should know and take comfort in. However, your credit score may suffer if the IRS claims your property. Even after a full payment, this lien will show on your credit report for up to seven years.
Myth 4: Tax Settlement is Only for Large Debts
Another myth is that only people or companies with significant tax debts are eligible for tax settlement programs. The IRS provides a range of programs to assist taxpayers with different debt levels. A person could be eligible for a simplified installment plan that allows gradual payment even if only a small amount is owed.
Myth 5: Tax Debt Will Go Away If Ignored
This is an absurd myth that some tax delinquents wish were true with their fingers crossed. The IRS will never forget what you owe. This is an erroneous belief that can have serious consequences. The IRS has ten years from the date of assessment to collect unpaid taxes. Wage garnishment, bank levies, and property seizures are some collection methods the IRS can use. Interest and penalties on tax debts can also mount up over time.
Myth 6: Tax Settlement is a Quick Fix
Tax settlement is not a quick and simple solution to tax issues. It can be a drawn-out and challenging process. Loads of paperwork and negotiating with the IRS are some of the complexities that may take several months to carry out. You might even be asked for more records with supporting data during that period.
Myth Gone, Sanity Gained
Tax settlement can be a valuable tool for resolving tax debt, but it’s important to separate fact from fiction. By understanding the realities of the process and debunking common tax myths, you can make the right decisions and take control of your finances. If you’re struggling with tax debt, seek professional guidance. Get help from Richard Hackerman, a tax lawyer from Baltimore. Call us at 888-243-5500.
