Tag Archives: offer in compromise

3 Ways to Start Eliminating Your Tax Debt

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If you have a large IRS tax debt, the amount you owe can be daunting. To avoid being charged additional fees and making the debt larger, it is important to act and begin the tax settlement process quickly. Even if you cannot pay it off all at once, there are options you can pursue to eliminate your tax debt. Here are three methods that can help you to settle or eliminate your tax debts.

Offer in Compromise It is possible to reach a tax settlement with the IRS that is less than the full amount you owe. This plan is called an Offer in Compromise. Although filing an Offer in Compromise can be time consuming and complicated because the qualifications are very specific, this is a powerful option because it allows for the resolution of all your outstanding tax balances at the same time, plus the suspension of collection activities while your offer is being considered.

Installment Agreements An Installment Agreement is a payment plan that is negotiated with the IRS or a State Tax Agency. Instead of paying one lump sum, the taxpayer agrees to pay a tax debt over a specified period of time. The terms of an agreement will be contingent on the tax liability amount and the taxpayer’s current and projected financial status (income and assets).

Uncollectible Status If you do not have sufficient income or assets to pay your tax debt, you may be eligible for the temporary designation of Uncollectible. If you have been granted this status, all collection activity stops until your situation is reevaluated, and the IRS determines that you have the ability to pay your debt. This can give you more time to work on paying off your debt without accruing additional fees and penalties.

Since the IRS prefers to receive the full amount of tax debt that you owe, they may not give you the best advice when you are seeking to use one of the tax debt elimination options above. A licensed tax professional can negotiate with the IRS on your behalf and help you to get reach the best possible tax settlement based on your situation.

If you need help with an outstanding tax debt, our experienced tax settlement professionals can help. We can also work with you if you need help filing your taxes. Please visit professionaltaxresolution.com for more information on our tax resolution services. You may also call us at (877) 889-6527 or email info@protaxres.com to receive a free, no obligation consultation.

IRS Offer in Compromise – A Review of Eligibility Guidelines

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We get a number of calls inquiring about the IRS Offer in Compromise Program. While an IRS Offer in Compromise is a very effective tax settlement option for a very well defined group of taxpayers, it is definitely not the optimum solution for anyone with an unresolved tax debt. The acceptance criteria for an Offer in Compromise are very specific, the application process is lengthy and the rejection rate can be high. Amazingly the IRS can also take up to two years from the date it receives the initial application to accept or reject an Offer in Compromise. With this timeframe in mind, it is often advantageous to enlist professional help when considering this tax settlement option. An experienced tax settlement professional will be able to determine whether the taxpayer meets the strict IRS qualification criteria and, following that determination, will ensure that the Offer in Compromise application is submitted according to published IRS guidelines. Utilizing a qualified CPA or tax professional can drastically reduce the rejection rate because the preliminary work to qualify you as an applicant and to appropriately complete the forms is done for you.

Not sure if you qualify? The primary components necessary to obtain a successful Offer in Compromise tax settlement are outlined below:

  • The taxpayer must meet one of the three eligibility criteria specified by the IRS. Those three criteria are

1) doubt as to whether the taxpayer is liable for the tax debt

2) doubt as to whether the taxpayer has the means to pay the tax debt

3) a determination that settling the tax debt would promote effective tax resolution.

Since the Offer in Compromise allows a taxpayer to settle a tax debt for less than the full amount owed, the IRS only accepts applications that adhere strictly to theses acceptance criteria.

  • The taxpayer’s eligibility must be adequately documented. Sufficient documentation to support one of the three eligibility criteria is required. This documentation may include tax returns and other financial records, disability claims and records of medical treatment and hospitalization, among other things
  • The total amount of the tax debt must be accurate. This means that the taxpayer must be current in submitting tax returns. All previously submitted returns must be checked for accuracy and refiled when necessary.
  • The Offer in Compromise application must have been submitted according to specific IRS guidelines. All of the necessary forms included with the application must be complete and all required fees and supporting documentation must be included.

Once an Offer in Compromise application is submitted, the IRS will begin its review process. During this time additional information and supporting documentation will be requested when necessary. The review process usually takes anywhere from six to twelve months but can take a maximum of two years. If the application is not officially accepted or rejected within two years, the IRS is required to accept the offer.

If you have an unresolved tax debt, visit us today at www.professionaltaxresolution.com for more information about our customized tax settlement assistance. With over 16 years of experience working with the IRS, our experienced professionals will help you determine which available tax settlement option best meets your specific needs. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to learn more about our services and to receive a free, no obligation consultation

 

Payment Installment Options for an IRS Offer in Compromise

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The IRS Offer in Compromise tax settlement option allows a taxpayer with an outstanding tax liability to settle the debt for less than the full amount owed. Although the Offer in Compromise has very specific acceptance criteria and may be difficult to obtain, it is a very attractive tax debt settlement option for those taxpayers who do qualify.

The IRS has made the Offer in Compromise a particularly attractive and popular tax settlement choice by offering three different payment plans. The flexibility makes this tax settlement choice attractive to taxpayers who have varying financial situations. Each of the payment options (outlined below) includes an initial payment to be followed by scheduled installment payments.

• The Lump Sum Cash Payment Plan requires an initial payment which must be equal to 20% of the Offer in Compromise tax settlement amount. The balance of the negotiated tax relief amount must be paid in five or fewer installments scheduled regularly from the date the compromise offer is accepted. (sapns2.com)

• The Short Term Periodic Payment Plan requires an initial payment to be followed by regularly scheduled installments that begin while the offer is being negotiated. The balance must be paid off within 24 months from the time the IRS receives the Offer in Compromise application.

• The Deferred Periodic Payment Plan requires an initial payment to be followed by regularly scheduled installments that begin while the offer is being negotiated. The balance must be paid off in more 24 months from the time the IRS receives the Offer in Compromise application but before the ten year statutory period for collection is up.

Hence, the IRS Offer in Compromise is not a one stop shop. The versatility of the available payment plan options accounts for some of its popularity and make it an attractive tax debt settlement choice for a wide range of taxpayers.

At Professional Tax Resolution we make sure that you take advantage of the best tax resolution option available. We carefully analyze the tax debt and financial situation of each of our clients and only recommend filing an Offer in Compromise when we believe it will be accepted. If we determine that you meet the candidacy requirements for an Offer in Compromise, we will work with you to prepare the offer and to submit all of the required documentation. We will also represent you before the IRS or State Tax Agency until the process is complete.

Click the “Learn More Link” or Call Toll-Free (877) 889-6527 to have one of our CPA’s provide a free, no obligation consultation regarding your eligibility for an Offer in Compromise.

Make the IRS an Offer They Can’t Refuse, and Reduce Your Tax Debt with This Tax Settlement Option.

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Chances are, you have heard the claims that your federal taxes can be settled for “pennies on the dollar” Sounds too good to be true, right? Although many of the companies advertising these claims are a scam, the IRS does have the authority to settle, or “compromise,” on tax debts, accepting less than the full amount owed. This settlement type is called Offers in Compromise, and it is just one of a few different options.  While only a select group of taxpayer’s qualify for this program, with the tough economic times we’ve all been through the past several years, the chances of qualifying are better than ever. If you can answer yes to any of the three questions below, it’s worth getting expert advice on how to make an Offer in Compromise.

Is your home underwater and your income less than your expenses? We’ve all seen our home’s value drop dramatically during this economic recession. It is possible you have negative equity or maybe you’ve lost your home altogether. Perhaps you lost your job as well, or are making far less than you were in the past. With more people in these types of situations than ever before, the IRS figures they will not be able to collect the full amount owed by you. That makes you a good candidate to make an Offer in Compromise.

Is it possible the government is wrong? Mistakes do happen. IRS examiners work under tremendous pressure. Perhaps yours misinterpreted the law, or maybe the examiner got the law right, but got the facts wrong. Maybe you have new evidence that would have affected the calculation of your tax liability. It makes sense to have an independent third party examine your records to determine if the IRS might doubt the accuracy of your tax liability and thus accept an Offer in Compromise.

Is the tax correct, but unfair? The IRS has the authority to reduce tax debt when collecting it would create economic hardship, or simply be unreasonable. The IRS gives an example of a couple with assets to satisfy their tax debts, but with an ill child requiring long term care. The couple’s assets and income are necessary to provide for the child. An Offer in Compromise is a legitimate consideration.

An Offer in Compromise is a negotiation. The taxpayer makes an offer, including a lump sum payment or payments over time. The IRS might accept the offer, reject it, or make a counter offer.

Contact one of our licensed tax experts at Professional Tax Resolution to find out if you qualify for an offer in compromise, or one of the other settlement options and see what we can do for you.

A Successful Offer In Compromise – $74,000 IRS Problem Settled at a 95% Discount.

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In February of 2011, Professional Tax Resolution finalized an Offer in Compromise agreement for a client who had initially contacted the firm in May of 2010. The taxpayer in question had an outstanding tax liability of over $74,000 which she was unable to pay. In this particular case, the debt was a combination of unpaid taxes, interest and penalties which had accumulated over a period of ten years. After verifying that the client met the IRS Offer in Compromise eligibility requirements, our firm initiated the settlement process by filing returns for tax years 2005 through 2009 which had never been filed. Once these returns had been finalized, we had an accurate assessment of the client’s total tax debt and were able to use this amount, together with her current financial information, to calculate a reasonable settlement offer. The completed Offer in Compromise application, including supporting documentation, was submitted to the IRS in July. Because the taxpayer’s eligibility had been well documented and established IRS filing guidelines had been adhered to throughout the application process, the initial settlement offer was accepted by the IRS without argument. The end result was the successful resolution of a $74,579 tax liability for $3785, just over 5% of the original debt!

The taxpayer whose settlement case is described in the preceding paragraph is a single mother who has struggled with chronic health problems for many years. From 1999 through 2009, a series of health-related setbacks resulted in periods of unemployment and accumulating tax liabilities. The client was hospitalized in January of 2010 in response some life threatening complications resulting from her health condition. She now receives state disability and is having trouble meeting her basic financial needs. Since it was very unlikely that this taxpayer would have been able to pay the full amount of her tax debt within a reasonable period of time, she was 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 her outstanding tax liability and therefore met the doubt as to liability standard for eligibility.

• The taxpayer’s eligibility can be adequately documented.

Professional Tax resolution submitted documentation for the client’s medications, outpatient medical treatment, hospitalization and disability claims.

• The total amount of the tax debt is accurate based on tax returns that have been checked, submitted and refilled when necessary.

Professional Tax Resolution filed a tax return for any year where a return had not been previously submitted and checked all other past tax returns for accuracy.

• The Offer in Compromise application and the necessary supporting documentation are 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 for more information about customized tax relief assistance. With over 16 years of experience, we have the 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) 596-4143 or info@protaxres.com to receive a free, no obligation consultation.