Tax Liability of 49k Reduced to Settlement Amount of 1K Using IRS Offer in Compromise

Ms. Y, a single woman who works as a medical assistant, was already having trouble meeting her monthly expenses when unforeseen circumstances increased her financial burden. She was unexpectedly given temporary custody of her granddaughter when her daughter was unable to care for the child herself. This placed Ms. Y in the position of being a low income middle aged woman with the added financial responsibility of caring for someone else. In order to make ends meet, she reduced her tax withholdings. Although this decision helped in the short run, her underpayment of withholding taxes resulted in in the accumulation of a $49,000 tax debt.

When Ms. Y contacted Professional Tax Resolution she had not she had not filed tax returns for five years because she feared the consequences of not being able to pay the tax amounts owed. Prior to calling our firm, she had shopped around for a tax resolution company but always felt pressured by the sales people who took her calls. She was asked to pay thousands of dollars up front like and was treated like she was closing a business deal. When Ms. Y called us, she was promptly placed in contact with a certified tax professional. This staff member, who comforted her and assessed her situation, was the same professional who assisted her through the entire tax resolution process.

As usual, the Professional Tax Resolution team went to work immediately. Our first step was to file the past five years of back of tax returns which showed that Ms. Y owed a back balance of $49,000. We then completed a thorough analysis of her financial situation and determined that she was an ideal candidate for an Offer in Compromise. After filing the necessary paperwork requesting this tax settlement option and negotiating with the IRS on her behalf, the Offer in Compromise petition was accepted. The end result was that Ms. Y was able to settle her $49,000 tax debt by paying only $1,000 dollars!

Our team is dedicated to fighting for our clients and doing whatever it takes to get them the best tax settlement agreement possible. Although the Offer in Compromise tax settlement option discussed above has strict qualifying criteria, our staff will work to ensure that any client who qualifies is able to take advantage of the benefits it offers. Professional Tax Resolution clients have peace of mind because our staff is protecting them and working for them every step of the way. We follow each tax settlement case through from the initial consultation to the final resolution of the tax debt.

Tax Debt Reduced – Mr. S came to us as a referral from another client who was pleased with our service. After a consultation call, he came in to meet with one of our tax experts. His situation is very common in our line of business. He is a self-employed man who works from home. However, recent hardships made it difficult for him to pay the bills. To compensate, he had not paid 3 years’ worth of income taxes and owed the IRS about $73,000.

Our tax experts immediately began preparing his past unfiled tax returns. Once the tax returns had been filed, Mr. S still owed the IRS a significant amount of money. However, our team was able to determine that he was a good candidate for an Offer in Compromise (OIC). After 4 months of negotiating with the IRS, Mr. S wound up having to pay only $1000, approximately 1.5 % of the original amount he owed!

Although an Offer in Compromise is a fantastic way to dig oneself out of tax debt, it has very specific requirements. Talk with a qualified tax professional to see if you qualify. If you don’t, there are other ways to escape the bottomless pit of tax debt. An alternative tax settlement option we often seek is an Installment Agreement. We have had many successful cases of where an Installment Agreement has helped our clients pay off their tax debts.

March 2014

Just one year ago, in March 2013, Professional Tax Resolution received a call from an individual who had not filed tax returns for the previous five years.  Mr. D had continued to put off filing the returns because he knew he would owe a significant back tax balance once they were submitted. Like many other taxpayers, he works 40 hours a week, makes an average wage, rents a house, pays a monthly car note and has many other financial responsibilities, some of which had begun slip out of control. He had avoided filing his tax returns because the mere thought of adding a tax liability on top of his other financial obligations frightened him. This was the scenario that led up to Mr. D’s initial contact with Professional Tax Resolution.

Following a brief telephone consultation, Mr. D came to our office to meet with one of our tax professionals. After just a few questions regarding his current financial situation, the Enrolled Agent who interviewed him determined that he would be an ideal candidate for an Offer in Compromise. Our professionals immediately obtained a Power of Attorney, collected wage and income information, began investigating the client’s tax history and completed the filing of all unfiled tax returns.  Once all back tax returns had been filed, our team of professionals began gathering the financial information and supporting documentation necessary to file an official Offer in Compromise application. We simultaneously, contacted the State of California Franchise Tax Board to initiate removal of a wage garnishment that had been imposed to collect past due state taxes.

The outcome of Mr. D’s tax settlement case was positive across the board. By accepting the Offer in Compromise proposal, The IRS agreed to settle Mr. D’s outstanding tax debt for a mere 6% of the $80,000 he owed. This agreement was granted based on submitted documentation substantiating that his financial situation made it unlikely that he would be able to pay the entire amount of his back tax balance. In addition, the State of California Franchise Tax Board agreed to remove the Mr. D’s wage garnishment and replace it with a slow pay installment agreement.

Although the outcome of Mr. D’s tax settlement is not unusual, a successful resolution is not automatic. Both the Offer and Compromise and the wage garnishment removal have specific sets of qualifying criteria which must be properly documented. In addition, the IRS and the State Tax Agencies have very specific filing procedures which must be strictly adhered to in order for a tax settlement petition to be accepted. Both of these requirements were met in the case of Mr. D. The CPAs and Enrolled Agents at Professional Tax Resolution determined that his “doubt as to collectability” made him and ideal candidate for an Offer in Compromise. They similarly determined that he met the State requirements for a wage garnishment removal based on the fact the garnishment was making it difficult for him to cover his ordinary living expenses. Following these determinations, they submitted the applications and supporting documentation for each tax settlement option according to the specific procedures and time constraints set by the respective tax collecting agency. The result was overwhelming success!

Visit us today at www.profesionaltaxresolution.com to learn more about our customized tax relief assistance. With over 16 years of experience in the business of resolving tax debt, the CPAs and Enrolled Agents at Professional Tax Resolution can help you select the tax relief option will work best for your specific financial situation. Contact us today at (949) 596-4143 or info@protaxres.com to receive a free, no obligation consultation.

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. (https://store.spaceylon.com/) 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 info@protaxres.com to receive a free, no obligation consultation.