Under some circumstances, you may be able to achieve an excellent settlement on your unpaid tax debt in the State of Pennsylvania.
The Pennsylvania Department of Revenue is in charge of collecting state taxes. The DOR is similar to the IRS with regard to unpaid taxes in that you do have the ability to negotiate settlements with these organizations when you cannot pay your tax debt, but the quality of the settlement may not be great since they have all the leverage and want to get as close to 100 cents on the dollar for your debt as they possibly can.
However, after establishing the amount of debt you owe, the Pennsylvania DOR often passes the collection matters off to collections agencies after a very short period of time, whereas the IRS or other state tax agencies often take greater pains to collect the debt themselves.
Though having your debt sent to a collections agency may sound intimidating, it can actually have a very positive impact on your prospects for settling your tax debt.
In order to understand how and why this can improve your situation, you have to understand the way collections agencies work. These companies either work directly for a creditor as a first-party debt, are contracted by a creditor as a third-party debt collector for a percentage of the debt, or operate as debt buyers who will purchase the entire debt at a percentage of its value and pursue collections themselves in order to make a profit. The latter of these three collections agencies is the type with which you may be able to achieve a strong settlement on your tax debt.
Debt buyers tend to buy in bulk, purchasing as many debts as they can and trying to turn them over as quickly as possible so that they can profit from volume as opposed to getting big payoffs from individual debts. Thus, they might well be willing to agree to much more favorable settlement terms than the Department of Revenue in order to churn those accounts through their system and move on to the next one.
While you will probably still not be able to have a settlement offer of 10 cents or 25 cents on the dollar accepted by the collections company, you will likely be able to achieve much more favorable terms for your settlement than you otherwise would have in negotiating terms with the DOR or the IRS.
If you have delinquent federal or Pennsylvania state taxes, please contact Morgan Maxwell to help work towards a settlement that will prevent you from paying a nickel more than you have to.
Written by E. Morgan Maxwell
Since beginning his own firm, Mr. Maxwell has continued a tax-law oriented practice encompassing a wide range of transactions, planning and dispute resolution. His dispute resolution experience includes involvement at all levels of the Internal Revenue Service (Examinations, Appeals, Collections, Office of Professional Responsibility, the U.S. Tax Court), the Pennsylvania Department of Revenue, the Tax Litigation Section of the Pennsylvania Attorney General’s Office, Pennsylvania Commonwealth Court, Common Pleas Court and local taxing jurisdictions in southeastern Pennsylvania.
