Just a quick note about a new tool at the IRS site.
If you owe lots of money in back taxes, you might have been tempted by one of those ads promising to make your IRS debt go away for “pennies on the dollar.” Before you go and pay a few thousand dollars in fees to one of these (often corrupt) companies, you might want to check out the IRS Prequalification Tool for Offers In Compromise (OIC).
Basically, an (OIC) is the only real way you might be able to settle a tax debt for significantly less than your current liability. Qualifying is primarily a pretty mechanical process of running your income, assets, and liabilities through a formula. There’s some nuance to it, but it’s mostly just plugging in numbers.
Now with the new IRS tool, you can plug in the numbers online and get an idea whether or not you might qualify. If not, then you can stop being tempted by those offers to settle your IRS debts for pennies on the dollar. And if it appears you may qualify, just contact a local Enrolled Agent or CPA with a good reputation and have them help you with the process.
But whatever you do, don’t spend thousands of dollars to have a company tell you what you can now find out by filling out some forms online.