benefits of settling IRS tax debts
  • February 22, 2022
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There is every reason to expect bad news from the IRS once you are late with your payments. While this may be true, the IRS offers defaulting taxpayers many options to settle their tax debts to avoid penalties, interest, and other undesirable consequences. The options, such as an offer in compromise and a penalty abatement, present many benefits to taxpayers. Let’s look at some of the benefits of settling IRS tax debts.

1. Avoid Penalties and Interest

The main benefit of settling IRS tax debts is avoiding additional interest charges and penalties. The IRS charges a 0.5% failure to pay penalty per month, which can go up to 25% of your unpaid taxes. Settling tax debts as soon as possible results in lower penalties. In addition to the penalties, any outstanding balance owed to the IRS will continue to accrue interest. The interest rate is 3% plus the current short-term federal funds rate. Interest will not go away unless the actual tax liability is lowered, but you may be able to lower your balance by applying for IRS penalty abatement depending on your eligibility.

Related Blog Post: 7 IRS Offer In Compromise Tips You Must Follow to Avoid Rejection

2. No-Risk of Defaulting on Agreement

If you have successfully negotiated an IRS tax installment agreement with the IRS, you have to ensure timely payments. Any delay on your part can lead to the termination of the agreement, or you have to pay an additional reinstatement fee to get back on the installment agreement plan. The IRS doesn’t remind you of due dates, which is why we always recommend setting up a direct debit. If you don’t have enough money in your account, it will discontinue the installment agreement by default. If you are having trouble sticking to the installment plan, you can approach a federal tax attorney to explore avenues like an offer in compromise to settle your tax debt if eligible.

Related Blog Post: 4 Signs to Help You Avoid IRS Debt Tax Relief Scams?

3. Prevent a Lien

If a taxpayer owes more than 10,000 dollars to the IRS, the government agency has the discretion to file a lien on their assets. This lien may hinder your ability to acquire loans or mortgages. Even if a taxpayer with a lien is able to convince a bank to give them a loan, the bank may require a lien subordination, lien release, or lien withdrawal to finalize the loan. Additionally the bank may also inflate the interest rates in order to protect their interest. Once the IRS tax liability has been paid in full, the IRS is required to remove the liens within 30 days of receiving the payment.

Final Word

A tax attorney can help you navigate IRS resolution options, enabling you to catch up on your taxes. If you are looking for a trusted Dallas – Fort Worth tax attorney to give you options, including offer in compromise tips and any other assistance related to IRS tax debt, look no further than the Law Offices of Nick Nemeth. We provide IRS debt help to hundreds of taxpayers facing a range of IRS tax problems. Reach out to us for a no-obligation consultation. Simply call (972) 426-2553 or fill out our contact form, and we’ll get back to you as soon as possible.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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