by Fresh Start Tax | Feb 13, 2014 | Offer in Compromise, Tax Help, Tax Settlements
IRS Settlement Made Easy with the Offer in Compromise
I am a former IRS Agent and teaching Instructor.
It took them a long time but the Internal Revenue Service finally made it easy for taxpayers to settle their tax debt through the offer in compromise.
About three years ago management of the IRS came out with the new fresh start program or fresh start initiative that help taxpayers who owed back tax debt settle with the Internal Revenue Service.
When I was a former IRS agent and teaching instructor the offer in compromise was frowned upon.
Acceptance Rates for the Offer in Compromise
This last year 58,000 offers in compromise were filed and 38% of all those were accepted.
The average settlement on a dollar was $.14.
Right now the average wait to have your offer in compromise worked is four – eight months.
7500 cases right now or sitting in the IRS offer Queue.
The key to getting an offer in compromise settled
If you want to settle your tax debt with the offer in compromise it’s all about packaging and knowing the formulas.
The more work you do the less work IRS rest does.
Our recommendation is that you fill out the forms accurately and correctly and make sure all documentation is there so IRS can process your offer in compromise all at one time.
This makes the IRS settlement easy. IRS is looking for easy.
The most common mistakes taxpayers make is the lack of documentation.
Do not give the Internal Revenue Service or reason to reject your offer.
IRS will generally take the first road out of town and reject your offer if the packaging is incorrect. There are 7500 cases right now in the IRS queue that cannot be worked so IRS generally will reject the offer before they will tend to accept them. Basically anything on the offer in compromise financial statements that has a number on it must be verified to the Internal Revenue Service.
Documentation is key to settlement.
The key factor to settle on the lowest dollar.
To settle for the lowest hour possible you must understand the formulas.
IRS wants to get into your pocket as much as they can so they will look closely at the liquidity of your assets values and your income to expense ratios.
IRS has a system called the national standard expenses that they will apply against your income.
It is important to know national, local and geographical standards and apply them against your income.
Before any taxpayer submits an offer in compromise the taxpayer is best served by filling out and seeing for themselves that their offer has a chance to be accepted.
You can go to our homepage and click on forms and click on the link that says pre-qualifier tool for the offer in compromise.
There is a five step process that will tell you whether IRS will accept your offer in compromise.
If IRS feels you can keep making monthly payments however because you have substantial money left over monthly, IRS could reject your offer in compromise.
That’s why it is best to have a professional person review your offer in compromise before it is sent to the Internal Revenue Service.
Three Grounds of Acceptance
The IRS may accept an OIC based on three grounds.
First, 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.
Second, 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.
Third, acceptance is permitted based on effective tax administration.
An offer 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.
Other Information Offers in Compromise
The IRS is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers.
This streamlined OIC is being expanded to allow taxpayers with annual incomes up to $100,000 to participate. In addition, participants must have tax liability of less than $50,000, doubling the current limit of $25,000 or less.
OICs are subject to acceptance based on legal requirements. An offer-in-compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.
Generally, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
IRS Making it Easier to Settle Tax with the Offer in Compromise – Former IRS Settlement
by Fresh Start Tax | Oct 31, 2013 | Offer in Compromise, Tax Settlements
If you want to settle your tax debt through the process of and all for compromise it only makes sense to use a former IRS settlement officer who knows the system, the protocols, and the settlement formulas and theories to get your case accepted by the Internal Revenue Service if you are a qualified candidate.
We are a Florida tax firm that has 206 years of professional tax experience and over 60 years of working directly for the Internal Revenue Service right here in the state of Florida. We are A+ rated by the Better Business Bureau.
I Michael Sullivan am a former IRS revenue officer in teaching instructor with the Internal Revenue Service.
I have worked the offer in compromise program at IRS, I also taught the program and accepted cases for settlement.
A couple years ago, the Internal Revenue Service decided to change it thinking about the settlement program and decided to change its strategy.
The old system produce no results for the IRS or the taxpayer. It was useless.
In the past, it was almost impossible to get offers in compromise through the system but the new IRS fresh start program or IRS fresh start initiative has now made it possible for taxpayers to settle old tax debt.
There are strict qualifications to meet the standards of the Internal Revenue Service.
To make sure taxpayers are not submitting offers in compromise and paying firms thousands of dollars to settle their case with the Internal Revenue Service, the IRS have a pre-qualifier tool to make sure that you are a qualified candidate to settle your tax debt.
You can find that IRS pre-qualifier tool right on our website. Simply go to the homepage and click on IRS forms. You’ll see it listed on a page of forms.
One of the advantages of the IRS settling your case is that the federal tax lien is released, your case closed and will be left alone by the IRS.
The Offer in Compromise Program
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.
If tax liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC.
To be eligible for an OIC
In order to be eligible for an OIC, the taxpayer must:
1. have 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 only three grounds.
1. Acceptance is permitted if there is doubt as to liability.
This ground for acceptance 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.These are rare but possible.
An offer 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. Such hardships are usually for medical health reasons.
Forms to Use for an Offer in Compromise(OIC)
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-A (OIC) (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or
- Form 433-B (OIC) (PDF), Collection Information Statement for Businesses.
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 Fee for the OIC
A taxpayer must submit a $150 application fee with the Form 656.
There are, however, two exceptions to this requirement.
1. No application fee is required if the OIC is based on doubt as to liability.
2. 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.
Type of Payment Options to Settle Your Tax Debt through an Offer in Compromise
Taxpayers may choose to pay the offer amount in a lump sum or 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.
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.
Failure to met the terms of the accepted OIC/Tax Debt Settlement
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.
Very Important Note
When an Offer in Compromise 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.
Any refunds due within the calendar year in which the offer is accepted will be applied to the tax debt.
Appeal a Rejected OIC/Tax Debt Settlement
One of the advantages of using Fresh Start Tax LLC is that we have a former IRS appellate agent on staff who can help through this process.
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.
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, 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 is different from a rejection because there is no right to appeal the IRS’s decision to return the offer.
Keep in mind you can always file another offer in compromise.
You can file as many offers in compromise is you want.
Many times once you understand the process it is much easier to refile an offer in compromise correcting previous mistakes.
Call us today and we will walk you through the process of settling your tax debt through the offering compromise.
We are IRS and State specialty firm that deals with IRS problems, concerns and matters.
We are the affordable tax firm.
by Fresh Start Tax | Oct 31, 2013 | Offer in Compromise, Tax Settlements
Offer in Compromise to Settle Your Tax Debt
I am a former IRS revenue officer in teaching instructor with the Internal Revenue Service. I have worked the offer in compromise program at IRS, I also taught the program and accepted cases for settlement.
If you are looking to settle your tax debt with the Internal Revenue Service the process of doing so is through the offer in compromise.
About two years ago, the Internal Revenue Service decided to change it thinking about the settlement program and decided to change its strategy.
In the past, it was almost impossible to get offers in compromise through the system but the new IRS fresh start program or IRS fresh start initiative has now made it possible for taxpayers to settle old tax debt.
The offer in compromise is not for everybody.
There are strict qualifications to meet the standards of the Internal Revenue Service.
To make sure taxpayers are not submitting offers in compromise and paying firms thousands of dollars to settle their case with the Internal Revenue Service, they have a pre-qualifier tool to make sure that you are a qualified candidate to settle your tax debt through an offer in compromise.
You can find that IRS pre-qualifier tool right on our website.
You can call us today and we will walk you through the process and the program to see if you are an eligible candidate. One of the advantages of the IRS settling your case is that the federal tax lien is released, your case closed and will be left alone by the IRS.
The Offer in Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.
If tax liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC.
To be Eligible for an OIC
In order to be eligible for an OIC, the taxpayer must:
- have filed all tax returns,
- made all required estimated tax payments for the current year, and
- 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 grounds.
1. Acceptance is permitted if there is doubt as to liability.
This ground for acceptance 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 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.
Forms to Use for an Offer in Compromise
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-A (OIC) (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (OIC) (PDF), Collection Information Statement for Businesses.
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 Fee
A taxpayer must submit a $150 application fee with the Form 656. Do not combine this fee with any other tax payments.
There are, however, two exceptions to this requirement.
1. No application fee is required if the OIC is based on doubt as to liability.
2. 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.
Type of Payment Options to Settle Your Tax Debt
Taxpayers may choose to pay the offer amount in a lump sum or 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.
The statutory time
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.
Failure to met the terms
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.
Important Note
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.
Any refunds due within the calendar year in which the offer is accepted will be applied to the tax debt.
IRS Rejection of an OIC, you can appeal!
One of the advantages of using fresh start tax is that we have a former IRS appellate agent on staff who can help through this process.
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.
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, 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 is different from a rejection because there is no right to appeal the IRS’s decision to return the offer.
Keep in mind you can always file another offer in compromise.
Call us today to receive a free tax consultation or assessment on any potential IRS tax settlement. You can speak directly what tax attorney, CPA, or former IRS agent, manager tax instructor.
Remember, the offer in compromises are not for everybody.
Call us today or walk through the pre-qualifier tool yourself to find out if you are ineligible candidate.
Offer in Compromise to Settle Your Tax Debt with Former IRS Settlement Agents
by Fresh Start Tax | Oct 22, 2013 | Tax Settlements
How to Reduce your IRS Tax Debt – Through an Offer in Compromise
We are true affordable tax experts.
IRS accepts 38% of all offers in compromise.
The statistics for accepted settlements has risen through the years.
About five years ago the IRS only accepted 18% of all offers in compromise. IRS wants offers in compromise, they want to settle your case. However, you must qualify.
If you are thinking of filing to reduce your tax debt through an offer compromise it is essential you use a professional tax firm.
I say this because I am a former IRS agent, teaching instructor who worked and settled cases with the Internal Revenue Service.
Offers filed by individual taxpayers usually have little chance of acceptance because of the stringent rules of the IRS. Taxpayers choosing a good professional tax firm who charge reasonable pricing will have the best chance of reducing their IRS tax debt.
Note : All accepted offers in compromise are open to public inspection at regional offices for one year
As a former IRS agent the question I am most often ask is simply this,” how can I reduce my IRS Tax Debt”?
The only way you can reduce your IRS tax debt is to:
- file an amended return if applicable,
- have the statute of limitations expire on your case,
- abate penalties and interest, or
- file an offer in compromise to settle your debt for pennies on the dollar
The offer in compromise program is one that you hear in the media, on the web in many TV commercials. It is a program where you can settle your IRS debt for pennies on dollar.
You need to make sure you are using a credible tax firm to go ahead and present the offer in compromise to the Internal Revenue Service.
You need to beware of many of these advertisers that you see on TV because they are selling your information to third parties into the highest bidder. Many of these companies do not actually do the work. These companies are called lead generation companies.
When you chose a firm
When you choose a firm to reduce your IRS tax debt check the bios of that particular firm and make sure they have the credentials to back it up. Most professional firms will employ tax attorneys, CPAs, former IRS agents, enrolled agents. It is also essential you check the Better Business Bureau ratings.
Call us today for free initial tax consultation and we can walk you through the program.
You will also find an IRS pre-qualifier tool on our website so you can analyze your own case.
Reduce your IRS Debt
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.
The Internal Revenue Service will consider your unique and individual set of facts and circumstances such as:
Approved offers in compromise represents the most the IRS can and will expect to collect within a reasonable period of time. Remember the IRS statutory period of time to collect back tax debt is 10 years.
Explore all other payment options before submitting an offer in compromise. The Internal Revenue Service will make sure you do not have the ability to borrow money from a third party before accepting your offer.
The Offer in Compromise program is not for everyone.
If you hire a tax professional to help you file an offer, be sure to check his or her qualifications. Make sure the tax professional has many years of professional tax experience and is well-qualified to attempt to reduce your IRS tax debt. There are many fly by nights in this industry.
Make sure you are eligible for Reducing your Tax Debt
Before IRS can/will consider your offer in compromise, you must be current with all filing and payment requirements.
You are not eligible if you are in an open bankruptcy proceeding.
The Offer in Compromise has a Pre-Qualifier tool to confirm your eligibility. You can find this on our website. It lets you enter your own numbers and figures and will let you know exactly what your offer has to be before you send it in.
Do not spend any money with a professional tax firm in less you walk through the pre-qualifier tool.
Submit your offer in compromise to reduce your tax debt
You’ll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF)
Your completed offer package will include:
- Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;
- Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;
- $150 application fee (non-refundable); and
- Initial payment (non-refundable) for each Form 656.
Select a payment option to reduce your tax debt.
Your initial payment will vary based on your offer and the payment option you choose:
Lump Sum Cash Payments :
Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.
Periodic Payment:
Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer. If accepted, continue to pay monthly until it is paid in full.
If you meet the Low Income Certification guidelines.
You do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.
Understand the process that will reduce your tax debt
While your offer in compromise is being evaluated:
1. Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);
2. A Notice of Federal Tax Lien may be filed;
3. Other collection activities are suspended;
4. The legal assessment and collection period is extended;
5. Make all required payments associated with your offer;
6. You are not required to make payments on an existing installment agreement; and
7. Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.
You can call us for a free initial tax consultation and speak directly to a true tax professional.
We have worked hundreds of offers in compromise through the years and we are one of the premier firms in the country for IRS tax debt reduction.
How to Reduce your IRS Tax Debt by Using Former IRS Settlement Agent
by Fresh Start Tax | Oct 2, 2013 | Back Taxes, Tax Settlements
File Back Tax Returns & Get IRS Tax Settlement at the Same Time
If you need to file back tax returns and you have put this off because there is some fear, there is a process to file all your back tax returns and apply for an IRS settlement called an offer in compromise or tax debt settlement.
What is a Offer in Compromise
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.
IRS will consider your unique set of facts and circumstances:
- Your Asset equity all will play a key factor in IRS tax settlement.
The IRS will generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
IRS will only be interested in your assets and income.
Please know the Offer in Compromise/IRS Settlement program is not for everyone.
We will have you walk through a pre-qualifier tool before we apply for an IRS tax settlement. It will save you time and money and in the same time make sure you are an eligible candidate to settle your IRS taxes.
If you have not filed your Back Tax Returns
You should know you are not alone.
Millions and millions of taxpayers has failed to file their old, back, and past due tax returns.
Once the snowball starts of not filing your tax returns the years add up quickly.
Taxpayers usually bury their heads in the sand for no reason. The process of filing your back tax returns and getting IRS settlements is much easier than taxpayers think.
If you want to get this process taking care of, just contact us today and we will walk to this process with you with a free assessment and let you know how the simple process can be.
We are comprised of tax attorneys, certified public accountants, and former IRS agents with over 60 years of combined work experience in the local, district, and regional tax offices in the state of Florida.
We better practice since 1982 and we are A+ rated by the Better Business Bureau.
If you need to file your back tax returns – With or Without records
If you need to file your old, past due, or late tax returns you can simply order your tax records from the IRS.
We can prepare your returns and send them to Internal Revenue Service.
If you have lost, destroyed, or no records we can reconstruct your tax returns. As former IRS agents, managers and tax instructors we have reconstructed thousands of tax returns over the years.
The Process
The process happens by us contacting the Internal Revenue Service and letting them know we will be filing your tax returns. Stop the worry now.
Once we notify the Internal Revenue Service and file a power of attorney, you will never have to speak to the Internal Revenue Service. All communication goes through our firm.
We will pull income tax transcripts which will allow us to see the income information that IRS has received on you as reported by third parties. We do this to make sure that IRS may not pull your return for a future audit based on unreported income.
If you do not file your own tax return IRS has the right to file for you.
IRS will prepare your return under 6020 B of the IRS code and they will do you absolutely no favors.
You will pay the highest amount possible. We can undo this process by filing for an audit reconsideration but is much more timely and expensive.
We will contact the IRS
Once we file your tax returns we will contact the Internal Revenue Service and provide them with the current financial statement.
With the current financial statement documented with all income and expenses the IRS will then process a tax settlement for you.
Tax settlements may come in the way of hardships, installment agreements or the offer in compromise which is mentioned above.The OIC will end your problem once and for all while the others are temporary solutions.
Once we review your financial statement we will walk you through the process of how IRS will settle your case.
We are one of the most experienced, trusted and honest firms in the tax resolution industry. We are A+ rated by the Better Business Bureau.
File Back Tax Returns & Get IRS Settlement at the Same Time – Jacksonville, Tampa, Miami, Ft.Lauderdale – FLORIDA
by Fresh Start Tax | Sep 16, 2013 | Offer in Compromise, Tax Settlements
I am a former IRS agent, teaching instructor and have both worked and taught the IRS offer in compromise/tax settlement program at the Internal Revenue Service.
I have reviewed hundreds and hundreds of offer in compromises. I have accepted them at the Internal Revenue Service is a working agent and I have taught the IRS tax settlement program called the offer in compromise is a former IRS agent teaching instructor.
I am a tax expert when it comes to the IRS settlement program called the offer in compromise.
Last year Stats on OIC/IRS Settlement
Last year the Internal Revenue Service received 58,000 offers in compromise and accepted 38% of all offers filed. This is an upward trend from the last five years. This was the highest percentage from any previous year.
In speaking to an agent who works the offer in compromise program they stated that 90% of all those offers that were accepted were prepared and represented by a professional tax firm. Repetition is the father of success.
I highly recommend that a professional firm prepare and submit your offer in compromise because true professionals understand the criteria and the special nuances of the offer program.
The offer in compromise program is not for everybody. Many persons feel they can settle with the IRS for pennies on the dollar but there is very exacting criteria to get your case settled with the IRS.
The IRS now has a pre-qualifier tool that you can find on our website that will aid taxpayers as to whether they are a qualified and true candidate for the IRS tax settlement program.
Why to Hire a True Tax Professional
You hire a true professional tax firm because you want to win.
If you try this program by yourself the chances are your fall flat on your face. I can tell you this because I have seen the results as a former IRS agent.
There are many programs and initiatives the average taxpayer can do by themselves to avoid professional fees and costs unfortunately the IRS tax settlement program is not one of these.
A true tax professional will save you thousands of dollars and settle your case the first time around. The Internal Revenue Service has very specific formulas for the tax settlement program. It is important to know that you must give IRS to total value of your liquid assets as a base settlement. IRS will also review the value of your money on a monthly basis to determine the criteria of the settlement.
The other reason you do not want to self prepare is the simple reason that you don’t want expose yourself to the Internal Revenue Service when it is unmerited. If the Internal Revenue Service rejects your offer in compromise it gives them a complete roadmap to your assets and ability to pay.
The Internal Revenue Service will do an exhaustive asset search to find out if you are hiding assets are not revealing everything on your financial statement. The IRS will do a LEXIS-NEXIS – Accuraint search as well as a Google search on your name.
Beside that, the Internal Revenue Service will check Department of motor vehicle records, credit reports, and asked to see copies of various financial statements that you have given to third parties where you’ve applied for credit.
IRS does a very thorough job and working in the IRS tax settlement program called the offer in compromise.
In the last three years the Internal Revenue Service is making great strides to help taxpayers deal with their back IRS debt.
To the new Fresh Start program or Fresh Start initiative offered by the IRS shows that the IRS is reaching out to taxpayers and wanting them to settle their tax debt if they qualify through the offer in compromise program.
Before taxpayers go trying to settle their debts through the offer in compromise, taxpayer should be asking a lot of questions to the representatives they hire or screen to make sure that they are a qualified candidate for the offer in compromise program.
Once again, not all taxpayers qualify for the program.
I would suggest any taxpayer contemplating the tax settlement of an offer in compromise with the Internal Revenue Service to walk through the program with a professional firm before they give their money to anyone.
Taxpayers should also be aware that the Internet is full of splash page advertising promising tax settlements for the offer and compromise program, they claim they can settle for pennies on the dollar.
Most of these firms offering such claim are companies in business today and gone tomorrow.
Taxpayers need to ask a lot of questions and more specifically they need to speak to the person that may be working their case to settle their tax debt for pennies on the dollar.
Do not be tricked into talking into a fast talking salesperson about settling your case because it sounds real good.
I would highly recommend that all taxpayers check for the Better Business Bureau ratings, check for the company’s credentials, ask the company about similar cases that were worked what settlement was reached and ask to speak to the person directly that will be working their case within the firm. If you cannot speak to the tax professional who will be handling your case do not hire the tax firm.
As far as pricing goes, most offer in compromises from true tax professional companies will range anywhere from $4-$7500 based on the complexity of the case. This fee is very well justified because of the experience and professionalism of tax firm.
There are very few easy offers in compromise cases and most needs require a high degree of expertise to settle the case.
How to Settle with the IRS with a Offer in Compromise/IRS Tax Settlement
To find out how to settle with the Internal Revenue Service read the following and find out the tax protocols in dealing with the offer in compromise/tax settlement.
What is a Offer in Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed.
If the liabilities can be fully paid through an installment agreement or other means, the taxpayer will in most cases not be eligible for an OIC.
In order to be eligible for an OIC, the taxpayer must have:
- filed all tax returns,
- made all required estimated tax payments for the current year, and
- 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 reason for this is quite simple, the IRS can just sees the asset and collect the full value.
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.
Most offers in compromises take any where between 20 hours to work by an IRS agent. Also if an the offer and compromise is accepted it becomes a matter of public record and is available for public inspection.
The offer in compromise or tax settlement stays on record for one year at the regional tax offices for public inspection. That’s right, you can walk right into a regional office and asked them to see their accepted offers in compromise.
The IRS may accept an OIC based on three grounds.
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.
Exceptional circumstances IRS tax settlements
You should know that the IRS receive very few offers based on exceptional circumstances. These are extremely hard offers to get IRS to accept. These offers are very subjective and must be documented as to the exceptional circumstance.
A good example of an exceptional circumstance OIC would be somebody that is undergoing cancer and may not have a long time to live.
When submitting an OIC based on doubt as to collectibility or based on effective tax administration taxpayers must use the most current version of:
1. Form 656 (PDF), Offer in Compromise,
2. also submit Form 433-A (OIC) (PDF), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or
3. Form 433-B (OIC) (PDF), Collection Information Statement for Businesses.
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).
In general, a taxpayer must submit a $150 application fee with the Form 656.
There are, however, two exceptions to this requirement.
1. No application fee is required if the OIC is based on doubt as to liability.
2. 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.
Offer Options / IRS Tax Settlements
Taxpayers may choose to pay the offer amount in a lump sum or 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.
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 you default on a accepted OIC or Tax Settlement
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.
Should the offer in compromise the fault the taxpayer account will return immediately to the field workforce collections actions will take place.
It is though no offer was ever accepted by the Internal Revenue Service and the taxpayer must start all over again.
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.
If a Offer in Compromise Defaults
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 your offer in not accepted, Appeal
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.
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, 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 is different from a rejection because there is no right to appeal the IRS’s decision to return the offer.
It requires a lot of skill to deal with an offer in compromise. I would highly recommend any taxpayer contemplating the filing of an offer in compromise contacted true tax professional.
