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Owing a debt can seem like an impossible situation to get out from under, especially if the debt is owed to the IRS. The IRS has the legal authority to seize assets or garnish wages to satisfy a debt, making this type of debt incredibly dangerous for your financial well-being. There are several solutions that can help you escape the debt, including an offer in compromise. Speaking with a Ponte Vedra offer in compromise attorney can help you determine if this is an option.
Tax and debt laws are often confusing and complex. It may seem impossible to successfully navigate potential solutions for your IRS tax liabilities. The knowledgeable team with TaxSmith, LLC, has handled numerous IRS cases, so we are already familiar with the solutions that could work for you. Reaching out to TaxSmith, LLC, can be the first step toward debt relief for you and your family, especially if an offer in compromise is the most effective solution.
An offer in compromise is an agreement between you and the IRS pertaining to the total amount of debt that will be repaid. Ultimately, you send an offer of payment to the IRS that is smaller than the total amount owed and, if accepted, this new amount becomes the complete balance. Once this new amount is paid, the tax debt will be considered paid in full, and the IRS will write off the difference between the original debt and the offer amount.
Though reducing the overall debt you owe is already a strong benefit, it is far from the only benefit of an offer in compromise. While you are negotiating, the IRS will suspend all collection activity. This protects you from tax liens, tax levies, and wage garnishments.
There are several circumstances where the IRS would consider accepting an offer in compromise to settle a tax debt. Some of these circumstances are:
One potential downside to an offer in compromise is that, once accepted, the offer must be paid in full as a lump-sum payment or within 24 months. A lump-sum payment can be a difficult feat if the original amount owed is significant. Even 24 months could be an impossible timeline. Fortunately, the TaxSmith, LLC, team can help you determine the offer amount, if you can reasonably pay that amount, and other solutions if the settlement amount does not fit into your budget.
The IRS will use a complicated formula that accounts for factors like income, assets, and expenses to determine the reasonable collection potential they have on the debt. If the IRS determines that the amount of the offer is equal to the reasonable collection potential, they will accept the offer. If the amount of the offer is determined to be less than the reasonable collection potential but less than the overall debt, the IRS will submit a counteroffer.
Working with an experienced Ponte Vedra offer in compromise attorney can help ensure that the offer you send to the IRS is close to the amount that the IRS will determine to be the reasonable collection potential. TaxSmith, LLC, can calculate an offer that stops you from overpaying on the debt.
A: The IRS formula that determines what value they will accept is complicated and involves numerous factors. The total amount that you can reduce from your debt depends on how your specific variables impact the formula results. Our office can determine these variables and plug them into the formula, providing insight into the amount you can save.
A: Once accepted by the IRS, there are only two options to pay your new debt balance: immediately as a lump sum or in payment installations over the following 24 months. This short time period may be prohibitive, especially if your tax liability is substantial. You must determine if you can pay the offer within 24 hours before sending it to the IRS.
A: Once an offer in compromise has been accepted by the IRS, the value of the offer becomes your new tax liability. The difference between your original debt and your new debt is written off by the IRS. You will then pay the lump-sum value or begin installation plans, depending on which type of offer in compromise you submitted.
A: It is possible to complete the filing of an offer in compromise on your own. However, this is not generally recommended unless you are a tax professional. Filing without professional help can result in mistakes, which could cause you to be fined and/or decrease your likelihood of success. Working with an offer in compromise attorney in Ponte Vedra helps the process move more smoothly and often results in better odds of acceptance.
Owing a debt can weigh heavily on your mind, especially if that debt is owed to an entity as powerful as the IRS. With the nuances and complications in tax law, communicating with the IRS about your debt can seem daunting.
TaxSmith, LLC, can aid in negotiations between you and the IRS, helping you find a solution that ultimately satisfies your debt and stops the IRS from hanging over your every thought. Our experienced team members can examine your case and discuss your potential options. Then, we can assist in filing the correct paperwork for that process. To speak with a team member about your tax debt, contact our office today.
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