Tax-Relief Hype

"Pennies on the dollar" pitches usually aren't worth a nickel.

Tax troubles keeping you up at night? Then you’ve no doubt seen your fair share of late-night TV pitches to settle your tax debts for less than you owe. Such “pennies on the dollar” come-ons, regardless of the source, demand scrutiny -- especially if they promise an Offer in Compromise with the IRS. Such deals to settle tax debts for less than the full amount are rare. The IRS considered 44,000 OICs in 2008 and rejected 75% of them. An accepted offer will dig deep into your savings and other property, the equity in your real estate and cars, and your future income, less basic living expenses. (You may bristle at Uncle Sam’s interpretation of “basic.”)

There are other ways to catch up with the taxes you owe. If you’re in a short-term bind, you may be eligible for a 120-day extension. Longer-term installment plans typically give you up to 60 months to pay.

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.