Flat Fee Tax Service | Guide to IRS Offers in Compromise | San Diego | USA
Updated: Jul 5, 2019
What you will need to know about getting an Offer in Compromise from the IRS. What happens when you mix perhaps a divorce, maybe some poor financial decisions with unemployment, medical bills, and other monthly expenses? You’re left with a huge tax debt that you can’t pay.
You may want to pay your fair share of taxes, but you simply can’t afford it. If this sounds familiar, don’t worry—you’re not alone. On any given day of the week, there are 20 million Americans with an IRS tax problem.
Avoiding your tax problems will only make the situation worse. Rather than letting your tax debt continue to grow, why don;t we find a way for you to resolve it before the IRS starts enforcement action. THE TAX SETTLEMENT - OFFER IN COMPROMISE
An Offer in Compromise (OIC) could possibly be the remedy you’re looking for. It’s one of the most misunderstood and underused tax relief option offered by the IRS.
This article will provide you with everything you need to know about Offers in Compromise; who qualifies, how to apply, and how it can possibly wipe your tax slate clean. What is an IRS Offer in Compromise? An Offer in Compromise is a tax settlement or agreement between you and the IRS, where the IRS accepts less than the entire tax bill. If you qualify and you make the agreed payments, your tax balance is wiped clean.
The IRS accepted approximately 25,000 settlement offers out of the 62,000 submitted in 2017. That translates to a 40.32% acceptance rate and a 50.68% rejection rate. The IRS has been holding steady at approx. 40% approval rate over the past 4 or 5 years. FLAT FEE TAX SERVICE, INC. HAS A 96% IRS SETTLEMENT SUCCESS RATE. OUR TAX PROFESSIONALS DO NOT FILE FRIVOLOUS OFFERS IN COMPROMISE. Why does the IRS offer this tax option? The IRS wants to do 2 things - collect money and close cases. An Offer in Compromise will close your case.
Taxpayers struggling with debt may give up completely and stop filing their annual tax returns. Giving taxpayers a fresh start is a smart use of taxpayer dollars.
The IRS only has 10 years to collect taxes once a return is filed. The closer to that 10 year mark you get, the more aggressive the IRS will be.
The IRS can and will garnish your wages, the IRS will levy your bank accounts, and the IRS will put a lien on your property.
When a taxpayer lacks assets and lives paycheck to paycheck, an Offer in Compromise may be the IRS’s best chance of closing your case and getting a little bit of revenue from a delinquent taxpayer.
The IRS will not seize your wages, your bank account and property if you have an Offer in Compromise (#OfferinCompromise) under consideration. But the same cannot be said about liens.
How to qualify for an Offer in Compromise. There are three reasons the IRS might consider you eligible for a tax settlement.
You can’t afford the full amount. The IRS accepts that you don’t have the income or assets to pay the full tax debt before the statute of limitations (10 years) ends. Financial hardship. You are able to prove that paying the full amount would cause you economic hardship. Doubt over what you owe. There is doubt over whether you really owe the tax or about the accuracy of the amount. Eligible taxpayers must also: File all required tax returns. Be up-to-date with estimated tax payments (self-employed and business owners). Be up-to-date with federal tax deposits (businesses with employees). Not currently be in an open bankruptcy proceeding. How will the IRS determine my eligibility for a Tax Settlement? The IRS needs to determine whether taxpayers can afford to pay their tax debt in total. To do this, the IRS calculates their “reasonable collection potential.”
If it’s less than the total tax debt and they meet the other requirements for an IRS settlement, the IRS will consider your offer.
The IRS will also determine whether the Offer in Compromise is the maximum amount the taxpayer can afford to pay. This is why it’s important to understand IRS policies and procedures.
An experienced tax professional will help you calculate the lowest possible amount the IRS will accept. Ten (10) items to consider when negotiating an Offer and Compromse with the IRS: 1. You will be required to provide a detailed financial information to the IRS can have serious consequences. 2. Make sure you can realistically pay the monthly installments of your Offer in Compromise. If you default on a payment, you could end up back at square one with additional interest and penalty fees. 3. The statute of limitations on collecting taxes is put on hold while an IRS settlement is being assessed. Consider this if you are close to the end of the 10-year period that the IRS has to collect on a tax return. 4. Don’t promise more than you can afford when paying a lump sum. 5. Should the IRS rejects your settlement offer, you have the right to appeal within 30 days of the denial. 6. Tax refunds are automatically kept by the IRS to pay for your tax debt while it considers an offer in compromise submission. 7. Keep track of the date you applied for an offer in compromise. The process can be lengthy. But if the IRS does not reject, return, or withdraw it within two years, the offer is considered accepted. 8. If the IRS rejects your offer in compromise, do it again. 9. Request a transcript of your tax account to see if there are mistakes or omissions.
10. Submitting an offer in compromise will generally put tax levies and an IRS garnishment on hold. The IRS may still file a federal tax lien on your property. You Must Take Control of your tax debt. Not having enough money to pay your taxes isn’t a crime. You have options. Don’t avoid your tax debt. DON'T FORGET, FLAT FEE TAX SERVICE, INC. HAS A 96% IRS SETTLEMENT RATE OF SUCCESS. Don't let anyone tell you that you cannot settle with the IRS.
With a 50.68% rejection rate, an Offer in Compromise isn’t the easiest tax relief option to qualify for. It would be the smart move to consult with a licensed experienced tax professional before you submit an offer in compromise.
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