Can I Get An Offer-in-Compromise?

Offer-in-Compromise

I help taxpayers settle debts with the IRS and often they are interested in an Offer-in-Compromise or at times a taxpayer is unaware they can benefit from this provision. An Offer-in-Compromise aka an offer or OIC is where the IRS accepts less than the total amount owed by a taxpayer to settle the outstanding debt. Yes the IRS may consider this option but many don't really understand how the process works and they fail to obtain OICs much more often than they succeed. However, understanding the process, the options available, and the resulting strategies increase the likelihood of success. 

Myths about Offer-in-Compromise

There are many myths about OICs that you need to be aware of:

  1. You have to Offer at least 25% or the IRS will not consider it. Debts have been settled for much less in the right circumstances.
  2. You have to file the OIC when the IRS is really busy, during the tax season, to have a better chance of success. In reality, knowing how the process works it then does not matter when you submit the OIC.
  3. It is not worth it because the IRS never accepts OICs. I have successfully helped clients obtain Offers so this is not true. It again is probably someone who never learned the process and failed many times and has not resigned to never successfully filing an offer. 

The Process

The key in the process is understanding the IRS's Reasonable Collection Potential (RCP) calculation. The second key is understanding strategies available to reduce the Reasonable Collection Potential and hence the offer amount. As long as the offer amount meets or exceeds the RCP then the offer should be accepted. 


There are also two forms of offers, a lump sum and a periodic payment or Short-Term Deferred Offer. It is also important to understand these two options and the strategies associated with each one.

Qualifications

In addition to the RCP there are other requirements to get OICs accepted. According to IRS Topic 204 the following are also required to get an OIC accepted.

"To qualify 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."

Move Forward

The first step in filing an OIC is to file back tax returns and get current with your tax payments. This may seem daunting if you have not filed returns for years but I can help you with this. Believe me, you have been carrying around the weight of responsibility for this for too long. The time to get in compliance is now and then we can work on the payments with the IRS. In addition, penalties and interest can continue to accumulate. The sooner you get into compliance the sooner we can work out those debts and work at putting this behind you so you can move forward. 

An Offer-in-Compromise can be a financial lifesaver for a taxpayer. But OICs are complicated and involve a lot of strategy and a lot of work. In addition, there may be other options available to the taxpayer to help them with there tax debt, like an installment agreement. To know which option is best will require an evaluation of the taxpayers circumstances. Regardless of the time of year, it is always best to act quickly as the longer it is put off the more anxiety will be involved in moving forward. So to act now by contacting me to arrange a consultation to discuss your circumstances. I charge a small fee for the consultation which can be applied to my fees to represent you in negotiations with the IRS. The time to act is now so use my email before to contact me about scheduling a consultation.

These can be stressful times for taxpayers and negotiating with the IRS can add to anxiety. For me it is what I do and I can help you to try to get a resolution with the IRS for your tax debts. So contact me today using my email address below to arrange a consultation via a phone, Zoom, or Skype call.



The CPA Superhero
jeff.jhtaxes@gmail.com





Posts:




Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

I Can't Pay The Taxes I Owe By The Due Date - What Should I Do?



Real quick, with the deadline for 2019 taxes coming up on the 15th. What should you do if you can't pay what you owe? If you can you should still file your return. Filing an extension is an option for filing but not paying. If you are going to owe taxes and you file an extension the taxes due are still due on the 15th for 2019 returns. So you should pay those with your extension if you file an extension.

Now if you can't pay the taxes due by the 15th, whether you file a return or an extension you still have choices. I would recommend that you pay what you can by the 15th and have a plan to pay the remainder. Typically the IRS will send you a billing notice based on the return filed. When you receive that notice you can call the IRS and ask for more time. Typically they will give you 120 days. Then before that 120 days end you need to be able to resolve what you owe. If you can't pay all of it by then then you need to work something out with the IRS. 

You may be able to file an installment agreement and pay it over time. With this COVID-19 pandemic many will not be able to pay their taxes due because of job losses. In that case other arrangements need to be made. Perhaps an Offer in Compromise can be made to settle for less than what you oweThere are different options that can be explored. 

Don't just ignore the problem as it will result in anxiety that you will carry with you until you get it resolved. Contact me to arrange a consultation for a date time after the 15th. We can discuss your situation and work on a plan to get your taxes paid or compromised. I will typically charge  you $500 for the consultation which can be applied to any work you have me do to help you resolve your tax debts. The $500 fee is for your benefit. When you make that payment you are committing to resolve the issue and you are putting money on it. Too many people to do not address the issue and they let it fester for years. When you have paid me for the consultation it will give you extra motivation to get this done and take action toward getting your tax debts resolved. So let's get going to resolve your situation.

These can be stressful times for taxpayers and negotiating with the IRS can add to anxiety. For me it is what I do and I can help you to try to get a resolution with the IRS for your tax debts. So contact me today using my email address below to arrange a consultation via a phone, Zoom, or Skype call.



The CPA Superhero
jeff.jhtaxes@gmail.com






Posts:




Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

What Will the IRS Do If I Don't File My Returns


I am getting multiple calls a week now from taxpayers who have not filed back tax returns and they are worried about what the IRS will do. So what can they do? First, they want you to file your returns so they will send you notices as a reminder. But if after some time you don't file they have a couple of choices. The first is to file a Substitute for Return or they can summon you or your records.

A Substitute for Return

If the IRS has enough information about your income they can file a Substitute for Return (SFR) based on that information and send you a notice of the tax due. You can accept that SFR or you can file your actual return. In the case of stock sales or business income since the IRS does not have your cost basis or your expenses typically you will want to file your own return to get a lower amount of tax assessed. The third thing that happen is the taxpayer can not respond to the SFR. In that case it will go final and the tax on that return will never be dischargeable in a bankruptcy. In addition once the SFR is final the IRS can levy your accounts and file tax liens. 

Summons

The other option can be summons. The IRS can summons the taxpayer to appear with all their records at a set date and time. At that meeting the IRS will use your records to file a return for you. The IRS can also summons others like your bank(s) for your records so they can create a return. 

Basically what I have outlined here in a very simple way are a couple ways the IRS can proceed against you if you don't file a return or multiple returns. The IRS can get nasty but what they really want are the tax returns. Even if you get summons there are things to do so you don't have to appear based on the summons. But if you don't deal with it it can escalate to the Department of Justice who will order you to appear in Federal District Court with your records. The way you deal with it is get them what they want and I can help with that. 

As I have mentioned in other posts, often taxpayers don't file because they are afraid they are going to owe and won't be able to afford to pay what they owe. That anxiety can paralyze people but it does not relieve the anxiety. My experience has demonstrated that taxpayers often owe less in taxes than what they anticipated. 

What you need to do is file and the sooner the better for you financially and emotionally. In addition to the taxes you have penalties and interest that can add up. The other reason you need to file is for the ability to negotiate with the IRS to pay your tax debts. Typically something can be worked via an Offer in Compromise or an Installment Agreement, or other available avenues with the IRS. But no matter which resolution will work for you you need to first get in compliance by filing your tax returns. 

These can be stressful times for taxpayers and negotiating with the IRS can add to anxiety. For me it is what I do and I can help you to try to get a resolution with the IRS for your tax debts. So contact me today using my email address below to arrange a consultation via a phone, Zoom, or Skype call.



The CPA Superhero
jeff.jhtaxes@gmail.com






Posts:




Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

Need to Renegotiate That Installment Agreement With the IRS?



Renegotiating Installment Agreements

With the current economic conditions taxpayers in installment agreements with the IRS may be wondering if their installment agreements can be renegotiated. In the current environment it is certainly possible that installment agreements can be redone with the IRS if you have had a significant change in your circumstances. A call to the IRS might be able to get this done but it also could and probably will get complicated. In some cases the IRS may call for financial information to redo the installment agreement. In other cases where you don't have income at this time there may be other options to be explored to either settle your debt for less or negotiate a lower monthly payment for now that will be reviewed later by the IRS to see if you can begin paying more when your income improves. 

Compromising an Offer in Compromise

Also, if you have an Offer in Compromise with the IRS a compromise of that compromise is allowed and specifically stated as a provision in the Internal Revenue Manual. 

Arrange an Appointment for a Consultation

The times we are living in are very unusual and in many cases negotiations with the IRS will require creativity and exploring new avenues to settle tax debts. These can be stressful times for taxpayers and negotiating with the IRS can add to anxiety. For me it is what I do and I can help you to try to get a different settlement with the IRS. So contact me today using my email address below to arrange a consultation via a phone, Zoom, or Skype call.



The CPA Superhero
jeff.jhtaxes@gmail.com






Posts:




Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

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