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Difficult financial times affect many people and can lead to falling behind on tax payments. Dealing with money owed to the Internal Revenue Service (IRS) can be stressful, and many people think there is no way out of this situation. This is not true. There are several options for taxpayers who are unable to pay back past tax debts, penalties, and interest.
One option is an offer in compromise. This allows you to settle your debt with the IRS for less than the entire amount you owe. When you speak with a Jacksonville tax attorney, you can determine what options are available to you and what will best resolve your IRS tax debt.
An experienced tax attorney can provide you with your best options for settling tax debts. At Tax Smith Tax Attorneys, we have experience with many avenues to handle your tax collection issues and resolve your debt in a way that upholds your best interests. With decades of tax law experience, we have worked with cases like yours before. We know the necessary processes for many complicated scenarios for tax resolution.
If you think an offer in compromise or another tax debt settlement option is the right idea for your debt, we can help. Our attorneys can work closely with you to understand your circumstances. We can tailor our legal advice to meet your needs.
An offer in compromise (OIC) is a program offered by the IRS that allows qualified taxpayers to negotiate a settlement for their unpaid tax debt. For many taxpayers, it is the best solution to clearing their debt. The settlement you can ask for will be less than the total you owe to the IRS. During the evaluation of the OIC, the IRS will suspend collection activity.
Not everyone realizes that the IRS will make settlements with taxpayers. This is done so that you can reenter the system as a current taxpayer. An OIC is an option for taxpayers who cannot pay or may end up in financial hardship for doing so.
While the IRS website contains information and forms for self-filing, it is not recommended that you do so. Filing for an OIC is very complex, and it is best to do so with an attorney or tax expert. An attorney who is familiar with OIC forms will understand how your situation can allow you to pay less to the IRS. They can also avoid common pitfalls that could end up costing you more. If you work with a tax attorney, you can be confident that your forms are being done correctly. They know the necessary steps for the entire OIC filing and evaluation process.
There are three circumstances where the IRS will accept an OIC filing. You could qualify under one of the following:
When you file an OIC, you have the burden of proof to show one of these scenarios applies. You must prove you have no means of paying your tax debt, should not have to pay it, or that doing so would put you in hardship. An experienced IRS tax attorney can assist you in determining your eligibility and the best course of action for you.
In addition to one of the above qualifications, you must also meet the following qualifications to apply:
If you meet the Low Income Certification Guidelines, you do not have to pay the application fee or monthly installments while your offer is reviewed. Ensuring you do everything correctly will be much easier with an experienced tax debt attorney.
Filing and receiving a decision may take anywhere from four to twelve months, depending on your particular circumstances. If you have the necessary accurate personal and financial information, this will speed up the process. Appealing or disputing the decision will prolong the process. If a determination is not made by the IRS within two years of their receiving it, your offer is automatically accepted. This two-year period does not include appeals.
While your offer is being evaluated, your non-refundable payments and fees for the application are applied to your tax liability. You can also determine which tax year and debt they apply to. During evaluation, the following may happen:
When you first file for an offer in compromise, you can choose from two payment options. These are:
If you select a periodic payment offer, you must continue installment payments under the terms of the offer during evaluation. This is also applied to your liability.
These liability payments can be designated to the tax year or tax amount up until the OIC is accepted. Once accepted, no offer payments may be made to liabilities covered under the OIC.
The application fee for an offer in compromise is $205. The amount you pay in addition to the application fee depends on the type of payment offer you select. That will determine if you must also make installment payments during that time period. The nonrefundable payments are applied to your liability. This can be either 20% of your offer amount or one month’s payment. Your attorney and tax expert can advise you on how much your offer should be.
Tax professionals and tax attorneys are able to assist you with filing an offer in compromise and the steps that follow. These professionals can help you get the most from your application and give you a better chance at success. They can also advise you on what OIC qualifications you should apply under.
The offer in compromise acceptance rate is about 31% as of 2021. The IRS received 49,285 applications in 2021 and accepted 15,154. In 2020, they accepted 14,288 of 44,809 applications, or an acceptance rate of around 32%. Their 2018 report to Congress stated their acceptance rate at the time was 24%.
It is possible to complete the filing of an OIC yourself. However, this is only advisable if you are a tax expert. Filing for yourself means you are more likely to make mistakes that cost you fees and lessen your chances of success. When you work with a tax attorney, the process will go more quickly and is more likely to lead to acceptance.
If you think you qualify for an offer in compromise, contact Tax Smith Tax Attorneys to discuss your options. We can provide you with the personalized legal care you need to get the compromise you deserve.
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