How much will the IRS usually settle for?

The IRS usually settles for whatever amount they claim you can reasonably pay. To determine this, they consider your total assets (e.g., house and car), your income, and your monthly expenses. You can estimate how much you may receive as a tax settlement by using FreshBooks to compare these same factors.

How long does a tax settlement take?

A tax settlement can take anywhere from a few weeks to 12 months, depending on your negotiations. Changes to your account are quick once accepted. However, negotiations may take time, depending on your financial situation. You can use FreshBooks accounting software to keep track of all the financial details that could help you come to an agreement sooner.

Does the IRS ever settle for less than the amount owed?

The IRS may settle for less than your original taxes owed if you are eligible for an offer in compromise (OIC). You must prove that your taxes owed are more than what you can reasonably pay alongside your basic living expenses. Tracking your expenses using expense tracking software FreshBooks could be a great way to provide the IRS with data-based records that verify your claim.

Does the IRS ever negotiate settlements?

You always have the right to negotiate a back tax settlement with the IRS. You have the right to represent yourself or hire a professional as you see fit. You may negotiate your payment options or your adjusted amount based on your financial details and circumstances. It's important to understand tax law throughout the tax settlement process, especially if you choose to self-represent.

Does a tax settlement affect your credit?

A tax settlement will not affect your credit. The IRS cannot share your personal identifying information, so credit bureaus will not detect your payment plans. However, filing a Notice of Federal Tax Lien may affect your ability to obtain credit. Keeping track of your credit using FreshBooks is an excellent way to gain visibility into your financial health as you settle your tax debt.

Do you need a lawyer to negotiate with the IRS?

You don't need a lawyer to negotiate a tax settlement. However, they can be helpful. If it's within your means to hire one, a tax lawyer can significantly increase your odds of being accepted for a tax settlement. Many taxpayers find that other forms of help, such as tax accountants, can also provide this same benefit.

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