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Tax Defense Network FAQ

Tax Defense Network FAQ



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Published by Tax Defense Network
Most frequently asked questions for individuals that have IRS tax debt. This article covers many options that are utilized by Tax Defense Network's team of tax attorneys, CPAs, and IRS Enrolled Agents to resolve most federal and state tax issues.
Most frequently asked questions for individuals that have IRS tax debt. This article covers many options that are utilized by Tax Defense Network's team of tax attorneys, CPAs, and IRS Enrolled Agents to resolve most federal and state tax issues.

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Published by: Tax Defense Network on Jan 14, 2008
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Frequently Asked Questions Concerning Tax Debt Resolution
Help! I filed my tax returns but did not have the money to pay. Do I have options?
Taking the time to file your tax returns is the first step in working with the IRS. Sinceyou were unable to pay the taxes owed, the Internal Revenue Service will send you anotice stating you owe back taxes. The amount is usually much higher than what youthought because they have included penalties and interest. Since you are unable to pay atthis time, contact one of our Tax Professionals for a free, no obligation consultation.They will analyze your situation and work with you to create a solution that works. Formany taxpayers, this typically leads to an Offer in Compromise, Penalty Abatement, orInstallment Agreement.
What is an Offer in Compromise?
 An Offer in Compromise is an out of court agreement between the IRS and the taxpayerthat resolves the taxpayer's liability. The Internal Revenue Service has the authority tosettle or compromise federal tax liabilities by accepting less than full payment undercertain circumstances. These circumstances are:Doubt as to Liability - The IRS may also accept an offer in compromise when doubtexists that the amount of tax owed is correct. The taxpayer needs to explain why theybelieve that they do not owe the tax that they would like to compromise. Financialinability to pay will not be considered under this basis alone.Doubt as to Collectibility (most common) - Under this basis, there is doubt that theamount of tax owed can ever be paid back in full. In order to successfully negotiate thistype of offer in compromise, the taxpayer must demonstrate through complete andthorough financial statements and supporting documentation that there are insufficientassets and income to pay the full amount of tax owed.Effective tax administration - Under the third basis for an offer in compromise, there isno doubt that the tax owed is correct and there are sufficient assets and income to pay theentire liability. However, the taxpayer believes that, due to exceptional circumstances, it
would be unfair and inequitable to require full payment of the tax.The primary determinant on “doubt as to collectibility” is based on a taxpayer’s personalfinancial profile; including income, expenses, and assets. The IRS sets strict guidelinesfor income, allowable expenses (categorized as: Living, Housing, Transport), andavailable equity in owned assets. An additional benefit of submitting an OIC is that IRSRestructuring Act prohibits the IRS from collecting a tax liability by levy during theperiod in which the Offer is being processed, or 30 days following rejection of an offer,or during the appeal of an OIC. This window of non-collection is frequently a respite forour clients to avoid any IRS collection actions, thereby securing additional time forclients to pay and prevents the IRS from seizing any assets in the interim.If the offer in compromise is accepted, payment can be made via one of three options: 1)cash (within up to 90 days of acceptance); 2) short-term deferred payment plan (payablewithin 24 months of acceptance); or 3) a long-term deferred payment plan (payable overthe remaining time left on the collections statute).Once the offer in compromise is accepted, the taxpayer must remain in compliance withall filing and payment obligations, including staying current with quarterly estimated taxpayments and not incurring any new tax debt, for five years or until the offer amount ispaid, whichever is longer. Failure to abide by these terms may result in the default of theoffer in compromise and the reinstatement of the original tax liability.
What if I’m making installment payments, can I still do an Offer in Compromise?
 Absolutely, and in special situations the installment agreement can be suspended whilethe IRS is evaluating the Offer in Compromise.
Ok, what happens when the Internal Revenue Service accepts my Offer InCompromise?
 Typically, the Offer in Compromise states your intentions as to the amount and paymentstructure; therefore, you could have up to ninety days or 2 years to tender payment to theInternal Revenue Service of the offered amount. Once the IRS has received payment,they will release all tax liens and there is no further liability.
How long does it take an Offer in Compromise to be approved by the IRS?
 The Internal Revenue Service typically takes approximately six to twelve monthsdepending on caseloads. During this time, all further collection activities are suspended.
Does Penalty Abatement get my penalties and interest waived from my taxaccount?
Penalties can be removed provided you have a valid reason for falling behind. Interestcan be adjusted in the event of an error in the application of your debt or if you can
demonstrate that an IRS or state representative provided you with erroneous advice.Adjustments to your tax account could save you thousands of dollars. Our experiencedstaff has drafted hundreds of abatement arguments, and we can draft your penaltyabatement request for you.
How do I stop the IRS from garnishing my wages, levying my bank account, orseizing my assets?
 When you become our client the first step for us is to stop the IRS collection procedures.This means that all garnishing, levying, or seizures will be put in a hold status while wenegotiate the best possible outcome on your behalf with the IRS. The collections holdwill remain in affect for the entire length of the negotiation process which means yourassets will be safe.
Will I have to personally present my case before an Internal Revenue Serviceagent?
Revenue Officers will be contacting you to obtain full payment of your tax debt. When aRevenue Officer wants to meet face-to-face they are going to demand full payment. If full payment cannot be provided, they will try and force you to liquidate assets to pay thedebt in full. Unless you are meeting with your Revenue Officer to pay the debt in full,you will find it beneficial to have our Enrolled Agents, CPA’s, and Attorney’s on yourside to negotiate an alternative to full payment. Our tax experts can contact your RevenueOfficer to cancel the meeting. From that point forward, the Revenue Officer will dealdirectly with our firm so that you do not have to.
I have not filed returns for a number of years. Can I still get an Offer inCompromise or Penalty Abatement ?
 The Internal Revenue Service needs completed tax returns in order to move forward withan Offer in Compromise or an Installment Agreement. We can assist you in getting yourtax returns up to date and your life back on track.
Is an Offer in Compromise or Penalty Abatement right for me?
Every taxpayer has unique circumstances that need detailed explanations to help theInternal Revenue Service understand the problem as well as a viable solution. An Offer inCompromise or Penalty Abatement might be right for you. That is why we offer a freeconsultation to assess your needs and recommend the right solution. Once the Offer inCompromise or Penalty Abatement is accepted and paid, all liens are released.

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