Finding a Collateral Agreement
If you're facing some tax debt that you can't afford to pay off completely, then you may want to start some negotiations with the IRS. Although a lot of people think that there is no negotiating with the IRS, this is not true at all. In fact, the IRS is keen to negotiate with those who have tax debt, as it is a lot easier than trying to take funds through a bank levy later on. If you find that you are in a position where you need to do something about your tax debt, then you should see what your options for working out an Offer in Compromise. This could really end up being a great solution for your problems.
One important component that will be considered during an Offer in Compromise is a collateral agreement. This kind of agreement will be reached between you and the IRS when you are trying to figure out a way to pay off your taxes. Such an agreement will allow the government to collected additional funds from you in the form of assets if you don't keep the agreement that you have made with them.
Considerations Before Electing Agreements
If you decide that you want to enter into a collateral agreement with the IRS, then there are some things that you need to keep in mind first. One thing to always be aware of is that the IRS has the right not to enter into an agreement with you. If the IRS does not feel that the agreement is substantial enough, then you may be denied for this as well as your Offer in Compromise. As such, it's best for you to make the best offer you possibly can.
Another thing to note is that you can make a collateral agreement with the IRS that involves future assets. Even if you don't have the money now, you may have more income in the future. If, for example, you are completing a degree, you can expect to get a better job when you are done which will bring in more money. The IRS is going to take this into account when you are trying to negotiate an Offer in Compromise and a collateral agreement. Don't think that this future income will be exempt from your tax liabilities.
Preparing Collateral Agreements
If you have decided to try and enter into a collateral agreement, then you need to be prepared to include all necessary information in it. You'll need to do several things when you are preparing this, such as including all of the involved parties and noting your aggregate tax liability. You're also going to need to use this document as a means of laying out the method by which you are going to take care of your tax liabilities. Finally, you'll need to include dates in the collateral agreement that indicate when you will take care of these liabilities by.
Finding a collateral agreement that will work for you and for the IRS may not be easy. There are going to be some complicated issues involved, so it may be in your best interest to try and get some help when you are preparing such an agreement. You should consult with a tax attorney who can help you with these important issues. Although it may cost you some money to get this kind of help, it could really end up being invaluable to you. If you can reach a satisfactory agreement, then this can lift a lot of weight off your shoulders.
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