by Fresh Start Tax | Dec 18, 2013 | Tax Help
How to get Offer in Compromise Approved – Use Former IRS Agents
I am a Former IRS agent and teaching instructor of the offer in compromise program.
I understand the complete inner workings of the Internal Revenue Service and how to get an offer in compromise approved.
The Internal Revenue Service is making it much easier for taxpayers to get an offer in compromise approved.
Last year, 58,000 offers in compromise were filed by taxpayers with the Internal Revenue Service.
IRS accepted 38% of all offers in compromise filed by taxpayers.
The average settlement was $.14 on a dollar.
Taxpayers should know that there are 7500 cases sitting in the Internal Revenue Service queue at this time and offers in compromise take anywhere from four months to eight months to work.
It is much better for taxpayers to file an offer in compromise when they have received their CDP letters because the offers usually take a shorter period of time to work.
How to Get Your Offer Approved
It is all about knowing the IRS settlement formulas.
To get your offer in compromise approved you must know the systems, the formulas, and be familiar with the national standard test used by Internal Revenue Service to accept offers in compromise.
IRS will look at two main factors in settling your case.
The Internal Revenue Service is concerned about your income and your assets.
Regarding Assets
You must give IRS the total liquidity you have in all your assets or your offer in compromise will not improved.
This includes equities in vehicles, Ira, pensions and basically anything that has value. IRS will want you to surrender that equity to them and make them part of the settlement. Since the Internal Revenue Service can seize all those assets they absolutely mandate that that liquidity be part of the offer.
Regarding Income
IRS will want to know what the value of your current monthly income. IRS will compare your current income against the national, regional and local standards tests that you can find on our website or on IRS.gov.
Internal Revenue Service will find out if you have any disposable income after subtracted against the national, regional and local standards.
Any money left over monthly is multiplied by 12.
IRS will simply add up your total asset liquidity plus the value of your disposable monthly income and that will be the base amount of your offer to the Internal Revenue Service. The Internal Revenue Service will accept no less than that amount.
Other Factors
IRS will also at the full body of the case such as age, education level , medical conditions, prospects for more income.
Please understand IRS will Google your name and many times look at credit reports for hidden information you have not disclosed to them. Understand that IRS does conduct asset and name searches.
The New Fresh Start Tax Program to get your Offer in Compromise Approved
The Internal Revenue Service another expansion of its “Fresh Start” initiative by offering more flexible terms to its Offer in Compromise (OIC) program that will enable some of the most financially distressed taxpayers to clear up their tax problems and in many cases more quickly than in the past.
This focuses on the financial analysis used to determine which taxpayers qualify for an OIC. This announcement also enables some taxpayers to resolve their tax problems in as little as two years compared to four or five years in the past.
In certain circumstances, the changes include:
1. Revising the calculation for the taxpayer’s future income.
2. Allowing taxpayers to repay their student loans.
3. Allowing taxpayers to pay state and local delinquent taxes.
4.Expanding the Allowable Living Expense allowance category and amount.
What is a Offer in Compromise
The OIC is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.
An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or a through payment agreement.
The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s reasonable collection potential.
Offers in Compromise are always subject to acceptance on legal requirements and always must be approved by District Council of the Internal Revenue Service.
The IRS recognizes that many taxpayers are still struggling to pay their bills so the agency has been working to put in place common-sense changes to the OIC program to more closely reflect real-world situations.
Settlement types for Offer in Compromise
When the IRS calculates a taxpayer’s reasonable collection potential, it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years.
All offers must be fully paid within 24 months of the date the offer is accepted. we have had many clients have their offers in compromise accepted only to failed to meet the terms. If that happens IRS keeps all monies paid to IRS and starts the enforcement action in the cycle all over again.
Some of the Forms for the Offer in Compromise
The Form 656-B, Offer in Compromise Booklet, and Form 656, Offer in Compromise, has been revised to reflect the changes.
Other changes to the program include narrowed parameters and clarification of when a dissipated asset will be included in the calculation of reasonable collection potential.
In addition, equity in income producing assets generally will not be included in the calculation of reasonable collection potential for on-going businesses.
Allowable Living Expenses per the National Standards
The Allowable Living Expense standards are used in cases requiring financial analysis to determine a taxpayer’s ability to pay.
The standard allowances provide consistency and fairness in collection determinations by incorporating average expenditures for basic necessities for citizens in similar geographic areas.
These standards are used when evaluating installment agreement and offer in compromise requests.
The National Standard miscellaneous allowance has been expanded to include additional items. Taxpayers can use the miscellaneous allowance for expenses such as credit card payments and bank fees and charges.
Guidance has also been clarified to allow payments for loans guaranteed by the federal government for the taxpayer’s post-high school education.
Payments for delinquent state and local taxes may be allowed based on percentage basis of tax owed to the state and IRS.
Taxpayers wishing to settle their case with an offer to compromise should do so by the use of a professional tax firm that has filed at least 100 offers in compromises.
Unless you have extensive working knowledge of the Internal Revenue Service the odds of getting an improved offer in compromise are slim.
I’ll suggest taxpayers who want to do this on their own walk through the IRS pre-qualifier tool that they can find on our website.
It is understandable that taxpayers do not want to pay in the neighborhood of $5000 for a professional firm.
If you do this on your own, hazards that exist.
However , this pre-qualifier tool at least will give the taxpayers a better understanding of the offer in compromise program.
Please call us today for a free initial tax consultation.
How to Get a Offer in Compromise Approved – Use Former IRS Agents
by Fresh Start Tax | Dec 17, 2013 | Tax Help
Tax Tips to Help You Save for 2013
Yes, it is that time again.
Although the year is almost over, you still have time to take steps that can lower your 2013 taxes.
Now is a good time to prepare for the upcoming tax filing season.
Taking these steps can help you save time and tax dollars.
They can also help you save for retirement.
Here are three year-end tips from the IRS for you to consider:
1. Start a filing system for your taxes.
If you don’t have a filing system for your tax records, you should start one. It can be as simple as saving receipts in a shoebox, or more complex like creating folders or spreadsheets. It’s always a good idea to save tax-related receipts and records.
Keeping good records now will save time and help you file a complete and accurate tax return next year.
2. Make Charitable Contributions Now.
If you plan to give to charity, consider donating before the year ends. That way you can claim your contribution as an itemized deduction for 2013.
This includes donations you charge to a credit card by Dec. 31, even if you don’t pay the bill until 2014. A gift by check also counts for 2013 as long as you mail it in December. Remember that you must give to a qualified charity to claim a tax deduction.
Use the IRS Select Check tool at IRS.gov to see if an organization is qualified.
Make sure to save your receipts. Store in the clouds if you can.Plan for a disaster.
You must have a written record for all donations of money in order to claim a deduction. Special rules apply to several types of property, including clothing or household items, cars and boats. For more about these rules see Publication 526, Charitable Contributions.
If you are age 70½ or over, the qualified charitable distribution allows you to make tax-free transfers from your IRAs to charity.
You can give up to $100,000 per year from your IRA to an eligible charity, and exclude the amount from gross income. You can use the excluded amount to satisfy any required minimum distributions that you must otherwise receive from your IRAs in 2013.
This benefit is available even if you do not itemize deductions. This special provision is set to expire at the end of 2013.
See Publication 590, Individual Retirement Arrangements (IRAs), for more information.
3. Contribute to Retirement Accounts.
You need to contribute to your 401(k) or similar retirement plan by Dec. 31 to count for 2013. On the other hand, you have until April 15, 2014, to set up a new IRA or add money to an existing IRA and still have it count for 2013.
Another Tip sometimes forgotten:
The Saver’s Credit, also known as the Retirement Savings Contribution Credit, helps low- and moderate-income workers in two ways. It helps people save for retirement and earn a special tax credit.
Eligible workers who contribute to IRAs, 401(k)s or similar workplace retirement plans can get a tax credit on their federal tax return. The maximum credit is up to $1,000, $2,000 for married couples. Other deductions and credits may reduce or eliminate the amount you can claim.
IRS Taxes – Lower your 2013 Taxes – Tax Tips
by Fresh Start Tax | Dec 17, 2013 | Tax Help
IRS – Record keeping Requirements
Well organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination, or to prepare a response if you receive an IRS notice.
Records such as receipts, canceled checks, and other documents that support an item of income or a deduction, or a credit appearing on a return must be kept so long as they may become material in the administration of any internal revenue law, which generally will be until the period of limitation expires for that return.
For assessment of tax you owe – this generally is 3 years from the date you filed the return. Returns filed before the due date are treated as filed on the due date.
There is no period of limitations to assess tax when a return is fraudulent or when no return is filed.
If income that you should have reported is not reported, and it is more than 25% of the gross income shown on the return, the time to assess is 6 years from when the return is filed.
For filing a claim for credit or refund, the period to make the claim generally is 3 years from the date the original return was filed, or 2 years from the date the tax was paid, whichever is later.
For filing a claim for an overpayment resulting from a bad debt deduction or a loss from worthless securities the time to make the claim is 7 years from when the return was due.
If you are an employer, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.
If you are in business, there is no particular method of bookkeeping you must use.You are on your own.
However, you must use a method that clearly and accurately reflects your gross income and expenses.
The records should substantiate both your income and expenses.
Publication 583, Starting a Business and Keeping Records, and Publication 463, Travel, Entertainment, Gift, and Car Expenses, provide additional information on required documentation for taxpayers with business expenses.
Carry on!
IRS – Recordkeeping Requirements
by Fresh Start Tax | Dec 17, 2013 | Tax Help
Ever since I can remember as a former IRS agent, the Internal Revenue Service always honored the holiday season for taxpayers making sure they had money available the last two weeks of the year for holiday gifts, shopping and whatever.
This year, the IRS levy moratorium will take place from December 16 through to December 26.
IRS will not send out any IRS tax levies unless on a Jeopardy or termination cases.
The average taxpayer has nothing to fear.
IRS Levy Moratorium 2013 – December 16 – 26th – No IRS TAX LEVIES
by Fresh Start Tax | Dec 16, 2013 | Tax Help
If you want to settle your IRS tax debt it only makes sense to use former IRS agents who worked the offer in compromise program while at the Internal Revenue Service.
Do not just turn this over to anyone,you must know the system.
With a combined 60 years a of IRS work experience we know the IRS settlement formulas, the settlement protocols, and the settlement theories to go ahead and completely settle and resolve your IRS tax debt.
Last Years Stats on IRS Tax Debt Settlements
1. Taxpayers filed 58,000 offers in compromise last year.
2. 38% of all those offers in compromise filed were accepted by the Internal Revenue Service.
3. The average settlement on a dollar was $.14.
4. Currently there are over 7500 cases sitting in the IRS queue to be worked to settle your IRS tax debt.
5. Currently the IRS will take up to four months to start working on the tax resolution of tax settlements on offer in compromise.
The best advice I can give you is use a professional tax from was filed multiple offers in compromise to prepare and negotiate your offer in compromise.
Formulas Drive IRS Tax Settlements
There are certain formulas that IRS use to accept an offer in compromise.
Knowing these formulas are great help to the success taxpayers getting this tax debt or tax burdens off their back.
IRS can only settle a case by the use of the offer in compromise formula.
Being a former IRS agent and teaching instructor I not only worked and settled cases with the IRS but I taught the offer in compromise program to revenue officers and former IRS agents.
Because of the number of marketing and Internet companies aggressively seeking dollars from consumers there are many false claims and fraudulent advertising driving people to file an offer compromise when in fact they do not qualify for the offer in compromise program.
I would caution taxpayers in hiring any marketing or Internet company unless they speak directly to the person who will be handling there case.
You can call us today for free initial tax consultation and we can help go over the different you options you have the settle your IRS tax debt
The Offer in Compromise Pre- Qualifier Tool
The Internal Revenue Service couple years ago launched a pre-qualifier tool to help taxpayers navigate their way themselves to find out whether they qualify for the offer in compromise program.
You can find that pre-qualifier tool for the offer in compromise on our website. IRS always sticks to the settlement formula.
You should understand that there is a lot of skewing and a lot of internal maneuvers to make within that formula to make sure your offer in compromise can get accepted if you are in fact a qualified candidate/taxpayer for offer in compromise help.
Being former IRS Agents we understand the variations that can be made during tax settlements, we know the tricks of tax settlements
When the Internal Revenue Service accepts the offer in compromise a taxpayer who has a federal tax lien filed against their name will get that removed as soon as they fulfill the contract and terms of the offer in compromise. The tax lien can be removed within 30 days.
Also, Offers that are accepted by the IRS are a matter of public record in the regional IRS offices so Iris goes to extreme lengths to make sure offers in compromise are valid and in the best interest of the taxpayer and the United States.
Acceptance Formulas, Internal Revenue Service
IRS is interested in only things:
1.assets and
2.income. That’s it!
IRS will want the total liquidation values of all your assets and the IRS will value your income based on the monthly standards. You can find those on our website as well.
IRS will add your total value of your income and multiple by 12 the value of income over and above the necessary living expenses.
The IRS Offer in Compromise General Information that you should know
The Offer in Compromise will or can settle the taxpayer’s tax liabilities for less than the full amount owed.
It is important to remember that not all taxpayers are qualified candidates for the offer in compromise.
You should check with the true tax professional to make sure you qualify for this program. the person that should be representing you are negotiating your offer in compromise should have worked at least over 50 cases in the past.
That person should be a tax attorney, certified public accountant, enrolled agent or former IRS agent.
Make sure your are Eligible to Settle your tax debt
In order to be eligible for an OIC, the taxpayer must have:
1. filed all tax returns,
2. made all required estimated tax payments for the current year, and
3. made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees.
In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (the RCP). The RCP is how the IRS measures the taxpayer’s ability to pay.
The RCP includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property.
In addition to property, the RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.
The IRS may accept an OIC based on three 3 grounds and 3 grounds only.
1. Acceptance is permitted if there is doubt as to liability.
This ground is only met when genuine doubt exists under applicable law that the IRS has correctly determined the amount owed.
2. Acceptance is permitted if there is doubt that the amount owed is fully collectible.
This means that doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
3. Acceptance is permitted based on effective tax administration.
An offer in compromise may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.
OIC – Effective Tax Administration – Tough to get through
When submitting an OIC based on doubt as to collectibility or based on effective tax administration taxpayers must use the most current version of form 656 (PDF), Offer in Compromise, and also submit form 433 oic (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or form 433B oic (PDF), Collection Information Statement for Businesses.
These type of tax debt settlements with the Internal Revenue Service are used when taxpayers can pay their debt in full but because of extraordinary circumstances in their life such as medical issues and such, have to negotiate another settlement with IRS because of extraordinary circumstances.
OIC – Doubt as to liability
A taxpayer submitting an OIC based on doubt as to liability must file a form 656-l (PDF), Offer in Compromise (Doubt as to Liability), instead of Form 656 and Form 433-A (OIC) and/or Form 433-B (OIC).
Application Fees for the Offer in Compromise, its cheap but it costs.
In general, a taxpayer must submit a $150 application fee with the Form 656.
Do not combine this fee with any other tax payments. this will not work with the Internal Revenue Service.
There are, however, two 2 exceptions to this requirement.
First, no application fee is required if the OIC is based on doubt as to liability.
Second, the fee is not required if the taxpayer is an individual (not a corporation, partnership, or other entity) who qualifies for the low-income exception.
This exception applies if the taxpayer’s total monthly income falls at or below 250 percent of the poverty guidelines published by the Department of Health and Human Services.
Section 4 of Form 656 contains the Low Income Certification guidelines to assist taxpayers in determining whether they qualify for the low-income exception.
A taxpayer who claims the low-income exception must complete section 4 of Form 656.
Making a Decision of How to Pay the Offer in Compromise to settle with the IRS
Taxpayers may choose to pay the offer amount in a:
1. Lump sum or
2. In installment payments.
- A “lump sum offer” is defined as an offer payable in 5 or fewer installments and within 24 months after the offer is accepted.
If a taxpayer submits a lump sum offer, the taxpayer must include with the Form 656 a nonrefundable payment equal to 20 percent of the offer amount.
This payment is required in addition to the $150 application fee. The 20 percent amount is called “nonrefundable” because it cannot be returned to the taxpayer even if the offer is rejected or returned to the taxpayer without acceptance.
The 20 percent amount will be applied to the taxpayer’s tax liability.
The taxpayer has a right to specify the particular tax liability to which the IRS will apply the 20 percent amount.
- The offer is called a “periodic payment offer” under the tax law if it is payable in 6 or more monthly installments and within 24 months after the offer is accepted.
When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment along with the Form 656.
This payment is required in addition to the $150 application fee.
This amount is nonrefundable, just like the 20 percent payment required for a lump sum offer.
Also, while the IRS is evaluating a periodic payment offer, the taxpayer must continue to make the installment payments provided for under the terms of the offer.
These amounts are also nonrefundable.
These amounts are applied to the tax liabilities and the taxpayer has a right to specify the particular tax liabilities to which the periodic payments will be applied.
Important Note .
The statutory time within which the IRS may engage in collection activities is suspended during the period that the OIC is under consideration and is further suspended if the OIC is rejected by the IRS and where the taxpayer appeals the rejection to the IRS Office of Appeals within 30 days from the date of the notice of rejection.
If the IRS accepts the taxpayer’s offer, the IRS expects that the taxpayer will have no further delinquencies and will fully comply with the tax laws.
If the taxpayer does not abide by all the terms and conditions of the OIC, the IRS may determine that the OIC is in default.
For doubt as to collectibility and effective tax administration OICs, the terms and conditions include a requirement that the taxpayer timely file all tax returns and timely pay all taxes for 5 years from the date of acceptance of the OIC. Offers in compromise filed for effective tax administration are hard to get through.
I’ll will bet that no more than five offers in compromise were accepted under effective tax administration.
When an OIC is declared to be in default, the agreement is no longer in effect and the IRS may then collect the amounts originally owed, plus interest and penalties.
Additionally, any refunds due within the calendar year in which the offer is accepted will be applied to the tax debt.
If the IRS rejects your offer you can Appeal for File another OIC
If the IRS rejects an OIC, then the taxpayer will be notified by mail. The letter will explain the reason that the IRS rejected the offer and will provide detailed instructions on how the taxpayer may appeal the decision to the IRS Office of Appeals.
If you think you have a valid appeal fight for your offer.
The appeal must be made within 30 days from the date of the letter.
In some cases, an OIC is returned to the taxpayer, rather than rejected, because the taxpayer has not submitted necessary information, such as :
- has filed for bankruptcy,
- has failed to include a required application fee or
- nonrefundable payment with the offer, or
- has failed to file tax returns or pay current tax liabilities while the offer is under consideration.
A return of the OIC is different from a rejection because there is no right to appeal the IRS’s decision to return the offer. It is no big deal either way because you can always file a second offer compromise to settle your IRS tax debt.
Believe it or not there is an extraordinarily high number of offers in compromise returned because the taxpayer simply do not know how to complete the form. Even know it costs money to use a professional tax firm they are well worth the cost because they will probably settle your debt for less.
There are no limitations to the filing of offers in compromise.
You could file as many offers in compromise is you wish. The highest acceptance chance that you will possibly have is using tax professional firm who knows the offer in compromise program inside out. offers in compromise to settle your IRS tax debt is not for first-time users.
Also remember your offer in compromise may take up to six months to a year to work if you are a qualified and suitable candidate to settle your tax debt with the IRS.
Atlanta – Settle Your IRS Tax Debt – Tax Problem Help with Former IRS Agents
