The Tax Debt Settlement Program (TDSP) is designed to assist clients who want to pay back an outstanding income tax debt (currently $50,000 and higher) without having to go to court. The Tax Debt Settlement Program is an alternative to pursuing Tax Court action. The Tax Debt Settlement Program gives clients a choice to pay back their outstanding income tax debt through the use of a non-adversarial negotiation with the IRS, rather than using the court system to resolve the tax problem. The Tax Debt Settlement Program is designed to assist those who are unable to obtain legal representation to pursue their income tax matter in Tax Court. The Tax Debt Settlement Program is a non-court alternative to the Tax Court, and is very flexible in meeting the needs of clients.
The IRS currently assesses all penalties and interest that accrue during the time a person is waiting for the IRS to mail a refund. The TDSP includes penalties and interest (currently $50,000 and higher) which accrue during the time a person is waiting to receive a refund. When the IRS receives a payment, the IRS credits the amount that the client paid against his or her unpaid tax obligations. In other words, if you make a payment towards your unpaid tax obligation, the IRS will stop collecting interest and penalties from you.
An important consideration is that the tax debt should not be paid in order to reduce a client’s taxable income. The client’s taxable income is not considered in the tax debt amount. This means that a client who is making a large payment toward his or her tax debt will be able to make a substantial payment towards his or her annual income tax bill without being penalized by the IRS.
Advantages of the TDSP:
The TDSP is designed to benefit taxpayers who do not want to go to court to resolve a tax problem. The TDSP provides clients who do not want to go to court an efficient, affordable, and user-friendly way to resolve tax disputes.
The TDSP is also designed to meet the needs of clients whose problems with the IRS are complicated, such as those problems that result from complex tax situations. The TDSP is designed to provide an individual with the services of an attorney and an IRS officer to help settle a tax dispute.
The TDSP is designed to be useful to taxpayers who have little or no familiarity with court procedures. TDSP participants who appear in court, such as in an IRS collection case, may ask the judge for clarification on a point that is beyond their understanding. It is important that all parties in a case use all available resources, such as the TDSP, to fully understand the issues.
Participants in the TDSP may not need to know the law or the history of the IRS’s actions toward a client. An IRS Officer will help the TDSP participant understand the facts and applicable tax law and regulations.
How Does the TDSP Work?
Participants are assigned to a program administrator. The IRS Officer and the IRS Program Administrator work with the participant to develop a plan for resolving the dispute. If the IRS Officer and Program Administrator disagree on the plan, the matter is resolved through a mediation process.
If a dispute is settled through mediation, the IRS Officer and Program Administrator will prepare an official notice of decision. The Program Administrator will send this notice of decision to the participant.
The Program Administrator will also mail copies of the notice to the participant and the IRS Officer. Copies of the notice will also be sent to the taxpayer’s lawyer if one has been contacted by the participant. A copy of the notice will also be sent to the Regional Office in which the participant’s tax problem occurred. The Regional Office will maintain a file on the participant in order to keep track of all the correspondence with the participant.
If you are interested in more details about tax debt settlement, call (888)489-4889 for a free consultation.