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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. Since you were unable to pay the taxes owed, the Internal Revenue Service will send you a notice stating you owe back taxes. The amount is usually much higher than what you thought because they have included penalties and interest. Since you are unable to pay at this 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. For many taxpayers, this typically leads to an Offer in Compromise, Penalty Abatement, or Installment Agreement. What is an Offer in Compromise? An Offer in Compromise is an out of court agreement between the IRS and the taxpayer that resolves the taxpayer's liability. The Internal Revenue Service has the authority to settle or compromise federal tax liabilities by accepting less than full payment under certain circumstances. These circumstances are: Doubt as to Liability - The IRS may also accept an offer in compromise when doubt exists that the amount of tax owed is correct. The taxpayer needs to explain why they believe that they do not owe the tax that they would like to compromise. Financial inability to pay will not be considered under this basis alone. Doubt as to Collectibility (most common) - Under this basis, there is doubt that the amount of tax owed can ever be paid back in full. In order to successfully negotiate this type of offer in compromise, the taxpayer must demonstrate through complete and thorough financial statements and supporting documentation that there are insufficient assets and income to pay the full amount of tax owed. Effective tax administration - Under the third basis for an offer in compromise, there is no doubt that the tax owed is correct and there are sufficient assets and income to pay the entire 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 personal financial profile; including income, expenses, and assets. The IRS sets strict guidelines for income, allowable expenses (categorized as: Living, Housing, Transport), and available equity in owned assets. An additional benefit of submitting an OIC is that IRS Restructuring Act prohibits the IRS from collecting a tax liability by levy during the period 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 for our clients to avoid any IRS collection actions, thereby securing additional time for clients 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 (payable within 24 months of acceptance); or 3) a long-term deferred payment plan (payable over the remaining time left on the collections statute). Once the offer in compromise is accepted, the taxpayer must remain in compliance with all filing and payment obligations, including staying current with quarterly estimated tax payments and not incurring any new tax debt, for five years or until the offer amount is paid, whichever is longer. Failure to abide by these terms may result in the default of the offer 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 while the IRS is evaluating the Offer in Compromise. Ok, what happens when the Internal Revenue Service accepts my Offer In Compromise? Typically, the Offer in Compromise states your intentions as to the amount and payment structure; therefore, you could have up to ninety days or 2 years to tender payment to the Internal 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 months depending on caseloads. During this time, all further collection activities are suspended. Does Penalty Abatement get my penalties and interest waived from my tax account? Penalties can be removed provided you have a valid reason for falling behind. Interest can 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 experienced staff has drafted hundreds of abatement arguments, and we can draft your penalty abatement request for you. How do I stop the IRS from garnishing my wages, levying my bank account, or seizing 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 we negotiate the best possible outcome on your behalf with the IRS. The collections hold will remain in affect for the entire length of the negotiation process which means your assets will be safe.
Will I have to personally present my case before an Internal Revenue Service agent? Revenue Officers will be contacting you to obtain full payment of your tax debt. When a Revenue 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 the debt 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 your side to negotiate an alternative to full payment. Our tax experts can contact your Revenue Officer to cancel the meeting. From that point forward, the Revenue Officer will deal directly 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 in Compromise or Penalty Abatement ? The Internal Revenue Service needs completed tax returns in order to move forward with an Offer in Compromise or an Installment Agreement. We can assist you in getting your tax 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 the Internal Revenue Service understand the problem as well as a viable solution. An Offer in Compromise or Penalty Abatement might be right for you. That is why we offer a free consultation to assess your needs and recommend the right solution. Once the Offer in Compromise or Penalty Abatement is accepted and paid, all liens are released.
Can the IRS revoke an approved and paid Offer in Compromise or Penalty Abatement? As long as you comply with the requirements relating to filing returns and paying required taxes for the five years after the date your Offer is approved by the Internal Revenue Service your offer will not be revoked. What are your fees? Our fees for an Offer in Compromise or Penalty Abatement are generally a flat rate and the terms of our engagement are included with your FREE consultation. What states do you work in? We assist taxpayers in all 50 states. With the power of the Internet, fax machines and our state of the art customer service facility, we are able to assist thousands of taxpayers without compromising service. We are also located within a short distance from one of the Internal Revenue Service major facilities.
What are the documents that the IRS will need to review my case? The Internal Revenue Service in most cases requires paycheck stubs, bank statements, utility bills, mortgage or rent payments and investment documents. I heard the Internal Revenue Service can put you in jail for not filing tax returns, is that true? Intentionally not filing tax returns is illegal, a felony and subject to criminal and civil penalties. A false return detected by the IRS goes to the Criminal Investigation Division and can result in a punishment of one year in jail and a $25,000 fine and $100,000 for corporations. In addition, all tax returns must be accurate and truthful. Is there a solution that will allow me to sleep at night worry free? Absolutely, with our help you too can be free of fear from IRS collection actions. Time is a critical factor in resolving your IRS debt so contact Tax Defense Network, Inc. now at 888-248-9058 for a free consultation.