Lots of ads on TV for companies that assist those with huge debts to the IRS. Typically the ads say something like I owed the IRS $150,000+ and after the company assisted I only owed $294 or some other huge reduction! I notice that there is a disclaimer that one must owe the IRS $10,000 or more.
How does this work, is the IRS that incompetent? I also see that most of these companies are owned by former IRS agents?
What is the game here?

*I do not have tax issues, and typically receive a small refund, or owe a small amount, in both cases near zero either way, just curious about these ads!

I'd be very skeptical of those numbers. But I have heard (independently) that the IRS will negotiate.

Edit. An article on the subject:

https://qz.com/198915/yes-the-...nt-like-the-outcome/

They sound like bullshit to me, like those ads that state "the credit card companies don't want you to know this, but you don't have to pay all the debt back." I have nothing to back this up, but there is the old adage "If it sounds too good to be true, it is." For the IRS to take drastic measures like seizing bank accounts or garnishing wages, there has to be a large amount of money owed over a long period of time, or some evidence of criminal intent. If such a "forgiveness" program even exists, there are going to be very few people who qualify for it, let alone get such a drastic reduction. A negotiation for a slightly reduced amount might be possible. Realistically, most non-criminal tax delinquencies could be avoided altogether by arranging one's affairs properly.

The ads are mostly bullshit.

They may help negotiate a reduction (in exchange for immediate payment of a significant sum) or payout terms, but the IRS doesn't do wholesale forgiveness.

The IRS may also be more willing to forgive some interest and penalties in exchange for immediate payment of the taxes, and those penalties can be quite substantial.

quote:

Originally posted by jhe888:
The ads are mostly bullshit.

They may help negotiate a reduction (in exchange for immediate payment of a significant sum) or payout terms, but the IRS doesn't do wholesale forgiveness.

^^^ This.

But, where they do settle for pennies on the dollar, it's in cases where if they don't they will likely collect nothing. Bottom line is if you have ANY assets or ANY ability to produce income, they will not compromise.

IRS loans are the worst kind of interest because it's compounded daily. Add in any penalties they deem appropriate and a small $10k tax can ballon over $100k.

That's where the huge numbers come from in these ads.

The IRS, like Credit Card industry, "wants compliant people" in the system.

It is more money in their pockets when a person who is over their head in debt, or owing taxes, and neither are paying anything in/back, are "forgiven" some of the burden to "get them complying".


Once they have those folks back, many will not fall behind again.


Both are similar, as said, in forgiving some, while taking a large lump sum payoff, or a pretty steep re-payment program.


Those same people will "borrow" and "repay" many times the amount forgiven.

Another thing is the "buy in" by those who are delinquent, in hearing the ads, and hearing of other people "coming out alive", rather than the fear that they are going to be carted off to prison if they ever show their face.

They negotiate with the IRS to settle for less than is owed which is easy for the IRS to do because they're negotiating away the extortionate fees and penalties they levied. If owe $30k and do nothing interest and penalties start to add up and all of the sudden you owe over $100k after a year. You pay the vultures with the ad whatever they charge and they get that $100k+ bill knocked back down to $40k payable now.

quote:

Originally posted by Dallas239:
The IRS may also be more willing to forgive some interest and penalties in exchange for immediate payment of the taxes, and those penalties can be qu
ite substantial.

I can attest to this. I had to take control of a S-corp. that I am in. I discovered that state and federal taxes were done but never sent in for a 3 year period. The state would not budge but the feds settled for 1/3 of the amount owed. The owed amounts were all for penalties and interest.

The IRS sometimes will negotiate but those ads are mostly scams.

quote:

Originally posted by Flashlightboy:
IRS loans are the worst kind of interest because it's compounded daily. Add in any penalties they deem appropriate and a small $10k tax can ballon over $100k.

That's where the huge numbers come from in these ads.

This, they will likely easily negotiate the interest off. Many times the IRS failed to notify the person by sending it to the correct address and several years went by before they even knew. And a good number of times the IRS is way wrong in what the person owes, or it's a stupid clerical error or something to that effect and the person doesn't really owe the inflated amount.

My ex girlfriends dad was one of the largest Florida developers and the IRS by the time he was notified several years later they said he owed some ungodly amount like $1.5 million, in reality it was like $28k.

Not sure how different it is today but my father negotiated tax debt of 80+ grand down to 10 grand for my grandparents a number of years ago (10+). They might roll completely different now but it is possible. He specialized in corporate/tax law.