Question: Like others who have written in questions to you, I have significant tax debt. I am interested in the Offer in Compromise option, but you have said one must qualify for this option. What if I don’t qualify?
Answer: That’s an excellent question — one to which every person who has tax debt and is considering an Offer in Compromise should understand the answer.
You’re right in saying you must qualify for the Offer in Compromise — that is to say, not everyone is eligible. For those who do not know, the Offer in Compromise program allows taxpayers with significant tax debt to negotiate settlement amounts with the IRS that often come to a small percentage of what they owe. Here’s the important part: To qualify for the program, the IRS must believe you do not have a reasonable ability to pay your debt in full, even over time.
This is the situation for many people with tax debt. Their debt may be related to a failed business, poor tax advice, or rising and unexpected costs in their lives, such as medical costs. In short, these are people whose financial situations have changed so drastically they will not be able to pay their tax debt.
But the Offer in Compromise isn’t the only option. For those with tax debt who do not qualify for the Offer in Compromise program, a good option is the Installment Agreement. Under this agreement, the taxpayer works out a payment plan with the IRS that eliminates the tax debt over time. This is similar to a monthly car payment — a large enough payment to pay off a significant debt over time but not so large that it will adversely affect your lifestyle.
Unfiled delinquent tax returns can weigh on you like a disease. Every unfiled delinquent tax return eats at you, year after year, compounding fear until you feel hopeless. So if you’ve got a late delinquent tax return, follow the simple steps outlined in this unfiled delinquent tax return checklist and get expert help from a tax attorney or a Certified Tax Resolution Specialist to check the IRS off your worry list forever.
If you’ve been lucky so far that your unfiled delinquent tax returns have avoided the IRS’s attention, your luck is about to run out. The IRS’s increased enforcement means that every unfiled tax return will soon be coming back to your door with as much as 25% penalties, interest plus the prospect of prison on federal felony back tax evasion charges. Our average client who has 4-11 years of unfiled tax returns we know how the IRS can take everything you own if you don’t act now. So if you’ve got a late delinquent tax return, act now on the eight easy steps in this unfiled delinquent tax return checklist and rid your worry of the IRS for good.
Unfiled Delinquent Tax Return Step ONE: Don’t panic, but head with all deliberate speed to your nearest tax attorney or Certified Tax Resolution Specialist for a tax relief consultation. When you have an unfiled tax return, it weighs on you like a disease. Every late tax return eats at you, year after year, compounding fear until you feel like you’re going to explode. You need to tell your tax attorney or Certified Tax Resolution Specialist how many years your unfiled delinquent tax returns have been ticking like a time bomb and what (if anything) the IRS has written to you about your unfiled tax returns. If your late tax returns go back for a number of years, you could be easily looking at many thousands of dollars in back taxes and up to 25% in penalties and interest. A call to a tax attorney or a Certified Tax Resolution Specialist is a financially shrewd move because the return on investment can be huge, often slashing or even eliminating your back tax debt for some or all of your unfiled delinquent tax returns.
Unfiled Delinquent Tax Return Step TWO: Start with the last year you filed taxes. Go back to the last year the IRS got your taxes. You’ll need figures from that return to fill out those unfiled tax returns.
Unfiled Delinquent Tax Return Step THREE: Make sure you have all the tax documents the IRS does. Go to your local Social Security office to get copies of all the W-2s, 1099s and other documents for the years you have unfiled tax returns. The IRS may have gotten a document that you didn’t and this could be the source of some of your unfiled tax return problem. For example, you may have worked with an out of state client and that may have meant you needed to file a tax return in that state. A good tax attorney or Certified Tax Resolution Specialist can help you recreate your late tax return paper trail.
Unfiled Delinquent Tax Return Step FOUR: Figure out what your original tax liability would have been. Most tax attorneys and Certified Tax Resolution Specialists work with CPAs, Enrolled Agents and other tax professionals who can help you prepare your unfiled tax returns. Since you know for a fact that the IRS will be examining these unfiled delinquent tax returns with a fine toothcomb, now is not the time for amateur hour. These late tax returns will get the IRS’s harshest scrutiny so you shouldn’t submit anything that isn’t 100% bulletproof. To survive this battle, you need the professional help of a good tax preparer, tax attorney or a Certified Tax Resolution Specialist. If you want to take a preliminary stab at creating the unfiled tax returns so your tax attorney or Certified Tax Resolution Specialist doesn’t have to start from scratch, the IRS has downloadable forms and instructions going back to 1980 here: http://www.irs.gov/formspubs/article/0,,id=98339,00.html. You must also get tax forms for your state. Many states have online forms going back only a few years. If you can’t get the forms for your unfiled delinquent tax returns online, you may have luck going to the library (call the reference desk first) to see if they have the IRS forms you need from the previous years. If they don’t have the late tax return forms for the years you need, contact a tax attorney or Certified Tax Resolution Specialist because they are virtually certain to have the unfiled delinquent tax return forms for the years you need.
Unfiled Delinquent Tax Return Step FIVE: Verify that the IRS and you agree on the unfiled tax returns. Once you have prepared the late tax returns yourself (or had a tax preparer do it), have a tax attorney or Certified Tax Resolution Specialist check your version of the unfiled delinquent tax returns against the IRS’s estimation of your back tax debt. Sometimes the IRS makes simple mistakes on their Substitute for Returns. The IRS may not know if you’ve had kids in the interim, or that your tax situation has changed substantially. A tax attorney or Certified Tax Resolution Specialist will interview you to determine whether the IRS has an accurate picture of your tax status.
Unfiled Delinquent Tax Return Step SIX: Send your unfiled tax returns to the IRS the right way. Any late tax return is too important to send electronically. Go to your local IRS office and hand deliver each return. Get a receipt for each unfiled delinquent tax return. If that doesn’t work for you, then send each return separately via certified mail. Just to be safe, send each unfiled tax return separated by a few days. Also note if you are told that your late tax return is in the collections or SFR (Substitute For Return) office. Be sure to get the proper address and sent each unfiled delinquent tax return separately to that address.
Unfiled Delinquent Tax Return Step SEVEN: Send in each unfiled tax return with a check for $5. Your interest and penalties for each late tax return compound with every day of non-payment (as much as 25%). Stop that clock as soon as you can by filing those unfiled delinquent tax returns immediately.
Unfiled Delinquent Tax Return Step EIGHT: Have your tax attorney or Certified Tax Resolution Specialist devise an IRS payment game plan. Can you pay your unfiled tax return back tax debt in full? Should you? Should you try for an offer in compromise? Should you try to get an IRS payment plan for your late tax return back tax debt? Expert tax help from a tax attorney or Certified Tax Resolution Specialist can help you decide on the game plan that makes the most sense for you. Remember that a good tax attorney or Certified Tax Resolution Specialist can often get you an offer in compromise tax settlement that will be pennies on the dollar.
If you follow these steps to solving your unfiled delinquent tax return problem, you can find hope. Working with a tax attorney or Certified Tax Resolution Specialist is the best way you can get many happier tax returns. Learn more about how you can find a tax resolution company you can trust.
For more information on how to resolve your back taxes and file delinquent tax returns, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.
Taxpayers need to be careful about getting their numbers crunched correctly for their 2010 tax returns. As the government grows more desperate for revenue and as the IRS steps up its game to collect more taxes, this is no time for the taxpayer to “neglect to pay certain taxes.”
A recent case involved Jesus Mena, of Miami, who pleaded guilty to filing a false income tax return for an S corporation for tax year 2003. Mena was the owner of Destiny Erectors, a construction company that provided labor for the installation of rebar. During the 2002 through 2004 tax years, Mena cashed checks for services Destiny Erectors rendered. These amounts were not included on the tax returns. He faces up to three years in prison.
If you have IRS tax problems, you can get tax help from a tax attorney, CPA, or Certified Tax Resolution Specialist to help you get a penalty abatement or IRS payment plan. Do not gamble with your financial future–make sure you have all the necessary tax documents, file your tax returns correctly, and pay up to Uncle Sam.
Tax Resolution Services is a team of expert tax attorneys, CPAs, and Certified Tax Resolution Specialists who are here to help you with your IRS tax problems. Call our office today at 1-866-477-7762 for a free tax resolution consultation or visit www.taxresolution.com
A man from Tennessee who owed the IRS $136,000 in back taxes, is now debt free thanks to our team of expert tax attorneys, CPAs, and Certified Tax Resolution Specialists.
In 1998, Lloyd S. faced an overwhelming tax debt of $136,000. After years of trying to handle his tax problems on his own with no success, he heard about our tax resolution services on Bill Handel’s radio show and he made the life-changing decision to get professional help qualifying for an Offer in Compromise tax settlement.
The IRS Offer in Compromise program offers tax relief to Americans by allowing them to settle their tax debt for less than what they owe. With our expert tax help, Lloyd won an Offer in Compromise for $2,290—less than 2 percent of the tax balance owed.
What taxpayers may or may not know is that the Offer in Compromise can be a complicated and drawn out process, which is why our team thoroughly analyzes each of our client’s current financial situation, previous tax returns and records to determine the exact amount owed. This really ensures that you as the taxpayer are not obligating yourself to pay a penny more than what you owe and you can finally retire your back taxes and IRS problems once and for all!
The truth is: it’s reasonable to anticipate that more offers than ever will be submitted to the IRS this year due to the economic challenges of the current recession. In consequence, taxpayers should be aware that IRS rejects the majority of offers they receive. Don’t take your chances–get professional tax help to maximize your rate of success for a tax settlement.
“I attempted the Offer in Compromise process on my own twice with no results, as well as having given one of TRS’s competitors nearly $5,000 in exchange for absolutely nothing but 14 wasted months, and no offer even submitted,” said Lloyd S. “I honestly felt an enormous weight has been lifted off of my shoulders, and I can now proceed with a ‘normal’ life, absent the constant worry and concern this horrible predicament creates!”
You can also learn more tax resolution stories from taxpayers just like you at The TRS Files.
Tax Resolution Services is dedicated to providing affordable solutions to businesses and individuals who find themselves in trouble with the IRS. Their team of expert tax attorneys, enrolled agents and CPAs has a success rate of 90% – second to none in the industry – and an Offer in Compromise Settlement Rate of $0.106 on the dollar. For more information or to receive a FREE tax relief consultation, visit www.taxresolution.com or call 866-IRS-PROBLEMS.
Michael Rozbruch, Certified Tax Resolution Specialist (CTRS) and a member of the American Society of IRS Problem Solvers, has a special message for you:
Whether you’d like to avoid the IRS, contact the IRS, settle with the IRS or just want to refer a friend, relative or client, I’d love to hear from you. I would be happy to provide you or that special person you refer a no-obligation confidential tax consultation to explain every option available to solve IRS problems.
A Delaware pleaded guilty to one count of mail fraud and three counts of tax evasion in an elaborate scheme to defraud computer maker Dell.
According to court records, between 2005 and 2008, Ning Zhu, 32, of Newark, Del., defrauded Dell of approximately $102,000 by fraudulently obtaining software in connection with the purchase of personal computers.
During the course of hundreds of transactions with Dell, Zhu, using multiple false names and addresses, claimed not to have received software that he had in fact received. Through this deception, Zhu obtained duplicate copies of the software, which he then sold unlawfully.
On his tax returns, Zhu falsely stated that his income for 2005 was $4,603, and that the amount of tax due was $0. In fact, his taxable income for 2005 was $300,333, and the amount of tax due was $79,701. He made similarly false statements in 2006 and 2007, grossly underreporting his income from the sale of the ill-gotten software.
On the mail fraud charge, Zhu faces a maximum up to 20 years in prison and a $250,000 fine. On each of the three tax evasion charges, he faces up to five years in prison and a $250,000 fine.
As you get ready to file your 2010 tax returns, you can visit the IRS website for guidance and answers to any questions you may have without having to call the IRS and be put on hold for an extended period of time.
Check out the top 10 reasons why a visit to the IRS website can resolve your lingering tax filing questions!
CCH (http://intelliconnect.cch.com) reports:
Top 10 Reasons to Visit IRS Website Provided
The IRS issued their top 10 reasons to visit their website for assistance in completing income tax returns. The key reasons are: unlimited access 24/7; information about electronic filing; the status of your tax refund; how to make payments electronically; determining if you qualify for the earned income tax credit (EITC); access to all tax forms and publications; calculating the correct amount of withholding for 2010; requesting a payment agreement; verifying whether you are donating to tax-exempt entities; and the latest tax law changes.
All of this can be found at http://www.irs.gov. The IRS also reminds taxpayers not to be confused by similar websites that end in .com, .net, org or any other designation; only the .gov site is the official IRS site.
If you have a tax question or need a tax form – there’s no need to leave the comfort of your home. All you need is a computer and Internet access because IRS.gov has a wealth of information.
Here are the top 10 reasons to visit IRS.gov.
1. Unlimited access – get answers 24 hours a day seven days a week. If you find yourself working on your tax return over the weekend, there’s no need to wait to get a form or an answer to a question – visit the IRS Web site anytime. IRS.gov is accessible all day, every day.
2. Find out all about electronic filing. Virtually everyone can prepare a return and file it for free. You can e-file from the comfort of your home 24 hours a day, seven days a week. E-file is fast and safe. Last year, 2 out of 3 taxpayers used e-file. Additionally, about 70 percent of taxpayers are eligible for the Traditional Free File. Find out more about Free File at IRS.gov.
3. Check the status of your tax refund. Whether you chose direct deposit or asked IRS to mail you a check, you can check the status of your refund through Where’s my Refund? at IRS.gov.
4. Find out how to make payments electronically. You can authorize an electronic funds withdrawal, use a credit or debit card, or enroll in the U.S. Treasury’s Electronic Federal Tax Payment System to pay your federal taxes. Electronic payment options are a convenient, safe and secure way to pay taxes.
5. Find out if you qualify for the Earned Income Tax Credit. EITC is a tax credit for people who earned less than $48,000. Find out if you are eligible by answering some questions and providing basic income information using the EITC Assistant at IRS.gov.
6. Get tax forms and publications. You can view, download and order tax forms and publications any hour of the day or night. Free File Fillable Forms are also available for those taxpayers that are comfortable filling out the forms and schedules without the help or assistance of software.
7. Calculate the right amount of withholding on your W-4. The IRS Withholding Calculator at IRS.gov will help you ensure that you don’t have too much or too little income tax withheld from your pay.
8. Request a payment agreement. Paying your taxes in full and on time avoids unnecessary penalties and interest. However, if you cannot pay your balance in full you may be eligible to use the Online Payment Agreement Application to request an installment agreement.
9. Search for charities. Search Publication 78, Cumulative List of Organizations to find out if an organization is exempt from federal taxes and, if so, how much of your contributions to that organization are tax deductible.
10. Get information about the latest tax law changes. Learn about tax law changes that may affect your tax return. Special sections of the Web site highlight changes that affect individual or business taxpayers.
If you are still unable to get the answers you need from the IRS website, you can get tax help from a tax attorney, CPA, or Certified Tax Resolution Specialist. There are many ways to resolve your tax problems–don’t let your tax questions go unanswered!
It is much better for you to seek tax help for your tax questions than to wait for the IRS to contact you with a tax problem that can result in IRS penalties. Call our team of expert tax attorneys, CPAs, and Certified Tax Resolution Specialists at Tax Resolution Services today at 1-866-477-7762 for a free tax resolution consultation or visit www.taxresolution.com.
A federal trial jury in St. Paul, Minn., convicted a 53-year-old Minneapolis man of evading payment of at least $332,162 in federal income taxes owed for tax years 2002 to 2005.
Steven Mark Renner was found guilty of four counts of tax evasion. According to court records, Renner diverted substantial funds from his business, Cash Cards International, between 2002 and 2005 to pay his personal living expenses as well as to make personal investments in coins, oil wells, art, stamps and vintage musical instruments. Renner also used CCI funds to promote his musical band, Stevie Renner and the Renegades.
From 2001 to 2006, Renner owned CCI, an Internet-based stored-value card and money-transmission business, with locations in Minnesota, South Dakota and Hawaii. Although he was legally obligated to file federal income tax returns and pay all federal taxes owed, he failed to file his income tax returns for tax years 2002 to 2004 until March 5, 2006, the date on which he also filed his 2005 federal income tax return. Moreover, he failed to pay the $332,162 in taxes due and owing for those years.
“Honest, hardworking taxpayers pay the price when others choose to evade their tax obligations,” said Julio La Rosa, Acting Special Agent in Charge of the IRS-Criminal Investigation Division’s St. Paul Field Office, in a statement.
A tough year calls for tough measures. The IRS knows this better than anyone and is not afraid to show its aggression with the increasing audit rate.
Nearly 1.4 million Americans were audited in 2009, which equates to 1% of all tax returns filed. Even if you can’t pay your back taxes, you can settle your debt by negotiating a reasonable monthly IRS payment plan or an offer in compromise settlement that pays a fraction of what is owed.
Take a look at Gary, a Los Angeles lawyer who was audited by the IRS to owe $43,000. Instead of panicking, Gary called a tax attorney at Tax Resolution Services and we helped him negotiate his IRS debt from $43,000 to $1,000. You can view Gary’s story below.
Find more true tax resolution stories at the TRS Files to see how people like you have put their IRS problems behind them for good.
Remember, you are not alone in dealing with your IRS tax problems. Our team of expert tax attorneys, Certified Tax Resolution Specialists, and CPAs are here to help educate you on your tax resolution options.
As taxpayers are getting ready to file their 2010 tax returns, an important thing to remember is to only claim deductions that you can substantiate with evidence. This is an easy way to avoid incurring the wrath of the IRS–do not deduct “business” expenses that are personal!
I have blogged about many cases before where individuals were subjected to IRS penalties for falsely claiming business expenses as a part of their deductions. When requested to bring evidence to support these deductions, these individuals were unable to produce them.
Remember, if the IRS suspects you of falsely claiming tax deductions, you are guilty till proven innocent. This means if you do not have the documents to back up your deductions, you are guilty and will be slammed with IRS penalties–whether or not the deductions were actually legitimate. So don’t make the mistake of being slammed by IRS penalties simply because you threw away your records.
Just recently a couple was penalized for claiming false business expenses because they had incorporated their insurance business as a method of tax-evasion.
CCH (http://intelliconnect.cch.com) reports:
Couple’s Claimed Business Expenses Were for Tax Avoidance, Penalty Imposed
A married couple could not deduct expenses they claimed from the husband’s insurance business for the years in issue because they failed to prove that the payments were ordinary and necessary expenses in carrying on a trade or business. Their testimonies that the payments made to their daughters were for services rendered to the business and that other payments made were for furtherance of the business were self-serving. Their documentary evidence did not have any economic reality beyond tax planning.
The creation and incorporation of the purported insurance business was for tax-avoidance. The claimed expenses for wages, rent, management services and other expense, were not for rendered services or connected with their insurance business, but were actually payments of the couple’s nondeductible personal living expenses and for their personal residence expenses. To bolster the chances that they would succeed in achieving their tax-avoidance objective, they created a fictitious paper trail that included a purported management consultant agreement, a purported employment agreement, a purported medical and dental reimbursement plan, purported real estate installment documents, a purported educational assistance plan document and a purported automobile installment sale agreement.
The taxpayers were liable for the accuracy-related penalty for the years in issue because they substantially understated their tax by claiming deductions to which they were not entitled. The taxpayers failed to carry their burden of establishing that there was reasonable cause for and that they acted in good faith with respect to any portion of the understatement of tax.
Don’t start off 2010 with new IRS problems. Avoid IRS penalties by making sure that your information is accurate and truthful on your tax returns. Always keep a careful record of your business expenses so that you can back up your tax return if the IRS requests evidence.
Tax Resolution Services is a team of tax attorneys, Certified Tax Resolution Specialists, and CPAs who are here to offer your tax help. You can call our office today at 1-866-477-7762 for a free tax resolution consultation or visit www.taxresolution.com.
Tax debt can be serious, large and feel crippling. When dealing with a large amount of taxes owed, it is advisable to seek professional tax services to explore your tax relief options. If you are not sure what kind of tax help you may need, call our office at 1-866-IRS-PROBLEMS or visit www.taxresolution.com.
——— Question: New Year’s Resolution: I want to get rid of my tax debt! I owe a lot too. A LOT! Between a failed business and bad tax advice, I owe low six-figures. I don’t even have that much money! What can I do?
Answer: Yours is perhaps the best New Year’s Resolution I can even imagine. Eliminating your tax debt once and for all is one of the best things I think you can do — not only from the obvious financial perspective, but from a mental perspective as well. I’ve heard from clients time and time again how relieving it is to have the taxman finally off your back.
So what should be your plan of attack be? The first thing you should do is consult a qualified tax professional. He or she will analyze your previous returns, current financial situation and other data and records to determine exactly how much you owe the IRS.
Based on some of the facts you offered in your question, I would guess the Offer in Compromise program might be your best option. The Offer in Compromise is intended for taxpayers who, for whatever reason, are unable to pay their tax debt, even over time. This could be due to a failed business, illness, legal judgments — any numbers of reasons. But no matter the reason, if you as the taxpayer can prove to the IRS that you are unable to pay the debt, the IRS will in certain cases agree to an Offer in Compromise.
This Offer in Compromise can effectively reduce your tax debt by pennies on the dollar, giving you a payoff amount that is not only substantially lower than the amount you owe but which is something you can realistically pay. I suggest you talk to your tax professional specifically about an Offer in Compromise. If, by chance, you do not qualify for the program, you have other options as well, including an IRS payment plan, also called the Installment Agreement.
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In my opinion, we have not seen the end of this torrid pace. Regardless of what Washington and the media would have you believe, more and more individuals and small businesses will seek protection from the bankruptcy code in 2010. I would suspect that 2010 will see a higher number of bankruptcies than 2009, especially after the health care reform kicks in and businesses are penalized for not offering health care to their employees because they simply cannot afford to do so.
Bankruptcy is a lagging indicator of things to come. While we’ve see a 32 percent increase in bankruptcies from 2008, our firm’s case load of small businesses and independent contractors who with IRS problems is up over 30% for this same period.
If your tax bill is overwhelming you, only a seasoned tax attorney, CPA or Certified Tax Resolution Specialist can provide tax help to show you the proper sequence of events to declare bankruptcy and completely eliminate all of your back tax debt, if you are eligible. For more information on how to resolve your back taxes and IRS problems, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.
In fiscal-year 2009, the IRS collected $48.9 billion through collection, examination and document-matching efforts. Nearly 1.4 million Americans were audited, which equates to just over 1% of all tax returns filed.
What’s astounding to note is that the audit rate today is 100% higher than in 2000. But just because a taxing authority has decided to audit you, does not mean you have to roll over and die or be pushed around by the IRS. Every taxpayer has the fundamental rights of due process, fairness and representation- even if the auditor does not explain this to you.
You need to understand that an incorrect assessment by an IRS auditor can end up costing you thousands of dollars, and taxpayers who seek professional tax attorney and tax resolution services have a better chance of successfully negotiating a tax settlement than those who try to deal with an IRS audit on their own.
We created the TRS Files (www.trsfiles.com) to educate taxpayers like you on options for immediate and permanent tax relief. It features real-life individuals and their life-changing decisions to put their tax troubles behind them – like Gary, a Los Angeles-based lawyer who knew that he couldn’t deal with an IRS audit on his own. Instead of panicking, he called us for expert IRS help and we negotiated his tax debt down from $43,000 to $1,000. You can check out Gary’s story in the video below.
“If you fail to respond to a letter from the IRS, they will garnish your wages, they will put a lien on you, and one day you will go to Starbucks and you’ll give them your credit card and they will tell you that there’s no money in your account. And you’ll find out why—the IRS took it,” Gary said. “Every day people get letters from the IRS, demanding money. The first thing I would do if I got a letter from the IRS is to call TRS to solve your problem.”
Tax Resolution Services is a team of expert tax attorneys, enrolled agents and CPAs. TRS has a success rate of 90% – second to none in the industry – and an Offer in Compromise Settlement Rate of $0.13 on the dollar. For more information or to receive a FREE tax relief consultation, visit www.taxresolution.com or call 866-IRS-PROBLEMS.
I always say that the best negotiation advice is: Every one walks away a little “hurt.” Even if you can’t pay your back taxes, a Certified Tax Resolution Specialist who is a tax attorney or CPA, can give you the help you need to settle your debt including negotiating a reasonable monthly payment plan or an offer in compromise settlement that pays a fraction of what is owed.
When fighting the IRS over your back taxes, you may feel manacled by the threat of tax liens, wage garnishments and jail time. But don’t worry, a tax attorney or Certified Tax Resolution Specialist knows all sorts of expert strategies to give you the tax help you need to walk away from the IRS with your money and your freedom intact. The trick is partnering with a Certified Tax Resolution Specialist or a tax attorney to increase your chances of qualifying for an IRS payment plan helping you settle your back tax debt for the lowest possible amount, and removing bank levies, tax liens or wage garnishments.
The best tax help a Certified Tax Resolution Specialist or tax attorney can offer is to broker an Offer in Compromise (OIC) settlement. While the IRS web site seems to make it easy to settle your back taxes by simply filling out an Offer in Compromise form, Uncle Sam’s tax help brings serious dangers. Make one mistake and not only will you pay more than you have to, but your very freedom could be at stake. Instead of thinking of it as IRS help, you should look at the Offer In Compromise form as a plea agreement in a criminal trial. You are admitting your full back taxes liability in the hopes of a reduced sentence. Is it smart to try to broker a criminal plea agreement without the tax help of a Certified Tax Resolution Specialist or tax attorney? No way! Unless you’re a Certified Tax Resolution Specialists or a tax attorney, leave tax settlements and Offers in Compromise negotiations to the experts.
New Offer In Compromise changes you need to know:
The offer in compromise (OIC) application is a challenging and burdensome process. The privilege of being approved for an OIC closely resembles receiving tax amnesty from the IRS. You can save thousands of dollars in back taxes, IRS tax penalties and interest. Recently, the IRS unveiled a simplified version of the OIC application form by splitting the original one into two parts: Form 656 and Form 656-B (Offer in Compromise Booklet). This new version of the application is more user-friendly and easier to understand.
The $10,000 Formula to Settle your Back Taxes
There is a simple guiding tax help formula about back taxes: If you owe less than $10,000, and you haven’t been in trouble before – you can call the IRS and they will hook you up with a payment plan to be paid in 36 monthly installments.
How Much Does the IRS Think You Are Worth?
An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service that resolves the taxpayer’s back tax liability, usually for a fraction of what’s owed. The taxpayer must file and pay his taxes on time for the next five years after acceptance…sort of like Tax Probation. The IRS settles for a lesser amount if there is doubt about the collectability of the amount over the remaining Collection Statute of Limitations vs. what they think they can collect now. If the IRS determines that receiving a lump sum now (albeit just a fraction of the amount owed) would be more than it would cost the agency, in overhead costs, over the remaining life of the collection statute, they will accept your offer.
The minimum offer amount must generally be equal to (or greater than) the taxpayer’s reasonable collection potential (RCP). The RCP is defined as the total of the taxpayer’s realizable value in real and personal assets, plus his/her future income. A Certified Tax Resolution Specialist or tax attorney can find ways to show the IRS that you’re not Daddy Warbucks while providing tax help such as removing wage garnishments and reducing your back tax debt.
To Qualify for an IRS Payment Plan or Tax Settlement
Before your tax attorney or Certified Tax Resolution Specialist can make an Offer In Compromise or negotiate a payment plan with the IRS to settle your back taxes, you need to come clean and file all delinquent tax returns with the IRS.
DO NOT SUBMIT AN OIC TO DELAY OR HINDER COLLECTIONS
If the IRS believes you are just using the Offer in Compromise to delay paying your debt or thinks you aren’t acting in good faith; they can revoke (return) OIC privileges to settle your back taxes debt. If you get on the wrong side of the IRS, the individual IRS agent has a lot of latitude to decide what they will allow you to do. An experienced Certified Tax Resolution Specialist or tax attorney will have threaded that needle hundreds of times before, giving clients back tax help without angering the IRS.
Why Some Offers in Compromise are More Likely to Get Accepted Than Others
Please note that in 2007, nationally, 46,000 Offers were submitted with only 12,000 or about 26% were accepted. The acceptance rate of a good tax attorney or Certified Tax Resolution Specialist, on the other hand, may be as much as five times (approximately 90%) the national average. Why? Because experienced Certified Tax Resolution Specialists or tax attorneys won’t allow clients to submit frivolous OICs. Sometimes the best tax help a tax attorney or Certified Tax Resolution Specialist can give is to say “no” to a client that is about to foolishly blow their hard earned money to settle their IRS back taxes. You must financially qualify and eligible for this program.
Last resort: Learn How to File For Bankruptcy Correctly to Help Solve Tax Problems and Reduce IRS Debt
If the IRS rejects your Offer In Compromise or denies you the privilege of making one, you still have the right to declare bankruptcy, but even that is tricky without the help of a tax attorney or Certified Tax Resolution Specialist. To get the maximum tax help from this drastic step, you have to declare bankruptcy at the correct time to eliminate your back taxes. TIMING IS EVERYTHING HERE! But what most clients (who try this without the tax help of a tax attorney or Certified Tax Resolutions Specialist) don’t know is that to completely discharge your back taxes debt you have to file on the correct date.
There are 3 general rules to be met to file for bankruptcy and discharge income taxes:
1) The income tax (payroll tax cannot be “bankrupted”) returns must be 3 years old or older than the due date, including filed extensions;
2) The returns have to be filed with the IRS 24 months prior to the petition, therefore Substitutes for Returns (SFRs) do not count (an SFR must be replaced with an “original” filed return and then wait 24 months). It has to be an originally filed return. And it must have been filed at least two years prior to bankruptcy.
3) 240 days have to pass from the date of assessment. Date of assessment is usually the date of filing, but if the IRS does an audit and they assess additional tax, that establishes a new assessment date for that year. So it is possible for a taxpayer to have two or more assessment dates for one year. If it’s used correctly, income taxes can definitely be discharged. You need a Certified Tax Resolution Specialist, or tax attorney, to properly analyze and interpret your IRS tax transcripts and Records of Account to determine when and if you are eligible.
So remember, even if you have crushing IRS debt from back taxes with no hope of ever paying it back, there are lots of possibilities. A Certified Tax Resolution Specialist or tax attorney has a full arsenal of tax help to settle your back tax debt with the IRS on a reasonable payment plan or an offer in compromise that pays pennies on the dollar of back taxes owed. With an experienced Certified Tax Resolution Specialist or tax attorney at your back, you can strut away from the IRS negotiating table with more money in your pocket and no danger of going to the big house.
I encourage you to learn more about how you can find a tax resolution firm that you can trust.
If your IRS bill from back taxes is too much to handle, only a seasoned tax attorney, CPA or Certified Tax Resolution Specialist can provide tax help to show you the proper sequence of events to declare bankruptcy and completely eliminate all of your back tax debt, if you are eligible. For more information on how to resolve your back taxes and IRS problems, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.
News, commentary, insight, tips and humor from tax expert Michael Rozbruch
Michael Rozbruch is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA.
IRS PROBLEMS?
If you find yourself in trouble with the IRS and need professional tax attorney and tax resolution services, call (888) 699-7630. Effective tax negotiation and representation means that your tax attorney, Certified Tax Resolution Specialist or CPA will take over all communications with the IRS, filing any delinquent tax returns to bring you to full IRS compliance while vigorously defending your rights as a taxpayer to permanently resolve your back taxes and IRS problems.
