Residents of Austin really do not want to fall behind in the taxes they owe to the Internal Revenue Service.

Even if the debt because of difficult financial circumstances, and not because of any improper activity, the IRS still has a wide range of ways to collect on tax debts, including liens and garnishments.

In many respects, the IRS has a lot more leverage than other creditors in the private sector, including credit card companies and medical providers.

However, like other creditors, the IRS will from time to time accept a guaranteed payment of less than what the taxpayer owes in lieu of going through the effort to collect the whole amount.

However, offering a settlement for less than the amount owed is not just a matter of calling up the IRS and pitching a dollar figure that the taxpayer can afford.

The IRS has a formal process, commonly referred to as an Offer in Compromise, which a taxpayer has to follow if she wants to settle her debt.

A taxpayer must first be eligible to make an offer in compromise. Among other things, the taxpayer has to have filed all tax returns and has to be current on any estimated taxes the taxpayer owes for upcoming years

Upon receiving an offer and the appropriate paperwork and filing fee, the IRS will evaluate it to decide if it will accept the compromise.

Specifically, the IRS will examine the taxpayer’s income and expenses and also evaluate the taxpayer’s overall net worth and ability to pay the debt.

A Texas taxpayer should prepare to provide detailed and accurate information about his finances.

While the taxpayer is waiting for an answer about whether the IRS will accept the compromise, it will continue collection efforts. Thus, when making an offer, time may be of the essence.