Settlement companies not always best at addressing tax debt

Settlement companies not always best at addressing tax debt

On Behalf of | Jan 18, 2021 | Tax Law

Needing help with outstanding taxes is not something to be ashamed of. Many people in Colorado and elsewhere end up in difficult financial spots now and then, and in some cases, they may not be able to pay what they owe to the IRS. Fortunately, being in this predicament does not mean that individuals simply have to sit with their tax debt. They could use options offered by the IRS, like an offer in compromise, to settle the owed balance for a lower amount. However, taxpayers should be careful where they go for help.

Though an offer in compromise is a legitimate tax settlement option for taxpayers who qualify, it is not an easy option to obtain. It can be confusing for taxpayers to try to apply for this assistance on their own, so many look for outside help. In some cases, a tax settlement company may seem like a good option, but many settlement companies offer false promises and end up costing taxpayers even more due to their high fees.

Settlement companies may also promise to get a taxpayer’s case completed quickly, but the IRS determines how long the application process takes. In fact, the process for an OIC application can take several months to complete. During that time, taxpayers would be continuing to pay tax settlement companies for their services, which could leave them with a hefty bill.

It can be difficult to know who to trust when trying to find relief from tax debt, but help is available. Rather than going to settlement companies that may make false promises, Colorado residents may want to work with individuals who will abide by the law and keep the taxpayer’s best interests in mind. Exploring available assistance options thoroughly is a wise step.