I owe the IRS about $16,000,down from $22,000 which I am now paying
off at the rate of $325.00 per month.AT this rate I will be paying for
a long time.This debt occured,because I had a
lot of my company stocks margned,and when the stock lost 97% of its
valvue,I had to sell to cover the margines.This in turn initiated a
$22,000 tax to the IRS.
My 401K is down to a few thousand dollars, due to the current market
conditions.
I have read on the internet,and other places advertisements that offer
to eliminate, or reduce your debt, to the IRS.I inquired about this
service with some of these accounting firms,and they didn't offer much
help.
I plan to use some of my home equity to pay off my charge cards, and
still keep my mortage within 80% of the total valvue of the home . I
had run up my charge cards with the intent,of paying them off with
some of my stocks,as they increased in value, but that is not
happening right now.
I do not have any other equity, other than what I have listed above.
My question is,do you know of any firms, that could help with this
debt, or do you have any advice. Thank You

Dear Tick,

PinkFreud and Luciaphile's dire warnings are only partly valid. 
There are reliable tax pros who can help you prepare and present
an offer in compromise (OIC). 

But, you don't really need their help. So, I wouldn't spend the
money. (Trust me, this is what I do for a living.) An ethical 
tax pro would tell you to try it yourself.  Why?

First, the costs for an OIC run from about $1500 - $3000 - and up.
They are very time-consuming. But, much of the time is spent trying
to get the documents from you. So, you'll save tons of time gathering
your documents yourself. 

Second, you probably won't qualify for the reduction.
Believe it or not, your balance due is pretty low. 
IRS, looking at your wages and home equity, car, etc,
even after you've refinanced your home to pay your credit
cards, will say, "Sorry. It's just the equivalent of a car payment."

So, if you are to attempt to get an OIC, you're better off
saving the money and doing it yourself.

TaxGuy gave you the link to the Form 656 below and is correct
about the pros. 
www.irs.gov/pub/irs-pdf/f656.pdf 

Click on that link and print out the forms. Read them very carefully. 
Make copies of the three months worth of documents IRS asks for and
have them  ALL ready to attach to the form, or to fax them to IRS. 

One of the reasons these requests take so long is that they
are not sent in with EVERYTHING. No, don't send it in with just
some documents. It's all or nothing. (The other reason they take
so long is, IRS is seriously backlogged with offers and doesn't 
have enough staff to process them.) So, once you do file, be sure
to make a note on your calendar to call in once a month the check 
on the status.

The other is that there are errors (social security numbers
filled in wrongly, name mispelled, other silly things). So, 
proofread the form three times before sending it in. 

Once you have everything in hand, CALL IRS at 800-829-1040
and tell them that you want to talk to the Offer in Compromise
unit. With only $16,000 due, you may be able to file it over
the phone and fax. (Yup, anything under $25K might be a candidate for
a faster track offer.) 

Some warnings: Do not lie. Do not omit assets. Don't hide assets.

It might be worth your while to pay a tax pro who is experienced
with OICs to review your application before you call IRS. (Paying
for one hour or so is worth it - and much less than the thousands
it would cost for the full treatment.)

So, don't be discouraged because, on the face of things it doesn't
look like you'd qualify. Try to file for the reduction. But don't
get sucked into paying high fees for this project.

If I can give you a little more guidance, please don't hesitate to ask.

Best wishes,

Your TaxMama-ga

I suggest using extreme caution when dealing with firms which offer to
eliminate or reduce your debt to the IRS. There are many unscrupulous
and fraudulent schemes being offered by clever thieves whose business
fronts and websites appear quite reputable. A relative of mine was
victimized by such a scam.

I'll second Pinkfreud's suggestion of caution. There are any number of
very unscrupulous companies offering to do things for a fee that
a)they cannot accomplish legally or b)that you can do yourself for
free.

I know very little about taxes, but what you might try with your
credit cards is to contact the credit card companies, explain you are
having trouble and see if they can work out some sort of an
arrangement with you.

Regards,
luciaphile-ga

Depending upon your credit card interest rates, it might make more
sense to use your home equity to pay off the IRS. Check what rate they
are charging you, sometimes it is extremely high.

Also, if you have a large cash payment, you can contact the IRS and
ask them to negotiate a lesser amount owed. I have recently done this
for my parents.

The IRS considers what you want to do an Offer in Compromise.  It is
filed on Form 656.  The form, with rudimentary instructions, can be
downloaded from the IRS website.  www.irs.gov/pub/irs-pdf/f656.pdf. 
You may want to use a tax professional who has had experience in this
area to help with the form and negotiating with the IRS.  There are
former IRS agents who perform this service well.