Tax settlement services

July 28, 2008 7:39 AM

How do tax settlement services work?

I owe back taxes for both Federal and State, and would love to pay it all off, but unfortunately don't have nearly enough savings.

While I'll likely work out something to make payments, I'm curious as to how tax settlement services work, and are they worth it?

posted by anonymous to Work & Money (4 answers total)

The IRS page on Offer in Compromise is a good place to start learning about this. You should be able to complete the application yourself without assistance. If you do need assistance, I'd go to a CPA, EA or Tax Attorney depending on your situation and how accurately you think your original tax filings were (you may be able to amend and get out of some of your taxes).

“This program serves an important purpose for a select group of taxpayers. But we are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “We urge taxpayers not to be duped by high-priced promises.”
posted by BrotherCaine at 6:03 AM on August 1, 2008

Also, see Installment Agreement Request. Please note that negotiating a payment rate that results in more than 5 years to pay off your debt will adversely effect your credit rating.
posted by BrotherCaine at 6:06 AM on August 1, 2008

Also, telling us which state you are in would have been helpful.
posted by BrotherCaine at 6:06 AM on August 1, 2008

I am not an accountant, and I am not your accountant. There may be circumstances where you can lose money filing an offer in compromise and then defaulting on it. Read all the linked pages on the IRS site, and all pages linked off the offer in compromise article before attemting to do it.
posted by BrotherCaine at 6:10 AM on August 1, 2008