In January of 2013, Professional Tax Resolution received a call from Mr. E. who owed the IRS over $200,000 that he could not afford to pay. The majority of his tax debt came from the short sale of a home in a prior tax year, which resulted in a balance due of $165,000 for that one year alone. After meeting with the client and going over some crucial financial and situational information, our staff determined that the client would be a good candidate for an IRS Offer in Compromise. We immediately filed a Power of Attorney and began investigating the client’s tax history. The research showed that the client had filed all necessary tax returns and was tax compliant except for tax balance due. Within a few weeks, the staff gathered all of the information and supporting documentation necessary to compile an Offer in Compromise Application. The official application was submitted to the IRS by the middle of February. In June of 2013, an Offer in Compromise Specialist contacted our staff to request some additional supplemental documentation. As soon as this was received, the IRS was ready to accept the original Offer in Compromise petition as submitted. The final settlement for 3% of the original tax owed was reached just five short months after the client first approached us for help!
Mr. E. is an insurance broker who has been struggling financially for the past six years and is barely making it by. The client’s current financial status made it very unlikely that he would be able to pay the full amount of his tax debt within a reasonable amount of time, making him an ideal candidate for an IRS Offer in Compromise. Outlined below are the primary components necessary to obtain a successful Offer in Compromise settlement as they pertain to this specific set of circumstances.
• The taxpayer meets one of the three eligibility criteria (doubt as to liability, doubt as to collectability, tax settlement would promote effective tax resolution) specified by the IRS.
Professional Tax resolution determined that this client would be unable to pay the balance of his outstanding tax liability and therefore met the doubt as to collectability standard for eligibility.
• The taxpayer’s eligibility can be adequately documented.
Professional Tax resolution submitted documentation showing that the client was basically insolvent and could not afford to pay the entire tax liability.
•The taxpayer was compliant.
Professional Tax Resolution filed an affidavit confirming that the taxpayer was compliant in filing all required federal income tax returns.
• The Offer in Compromise application and the necessary supporting documentation were submitted according to IRS guidelines.
Professional Tax Resolution has experience in submitting Offer in Compromise applications and adheres strictly to the established IRS policies and procedures.
While the Offer in Compromise is an effective tax settlement option for a very specific group of taxpayers such as the candidate whose case is described above, it definitely does not represent a blanket solution for anyone with an outstanding tax liability. The acceptance criteria are very explicit and, since many applications are submitted that do not meet the published IRS guidelines, the rejection rate is high. The Offer in Compromise is an excellent tax settlement option only under certain very specific conditions and when submitted using the very strict guidelines set forth by the IRS.
Visit www.profesionaltaxresolution.com for more information about customized tax relief assistance. With over 16 years of experience, we can help you select the tax relief option that will best meet the specific needs of your tax debt situation. Contact us today at (949) 242-9653 or firstname.lastname@example.org to receive a free, no obligation consultation.