Tax Solutions
Offer in Compromise: Our
Tax Attorneys have extensive expertise with planning, preparing, and negotiating
Offers in Compromise (“OIC”). If you qualify, an Offer in
Compromise is frequently the ideal solution for resolving your delinquent
tax liability. In the last published IRS statistics, the IRS reports that
the average discount on accepted Offers was 88% (only 12 cents on the
dollar was paid by Americans with accepted OICs), and that the average
acceptance rate was 47.6%. Given the savings possibilities on accepted OICs, the experienced team of Tax Attorneys and Tax Specialists at Freedom specializes in the Offer in Compromise program and works very hard to see if our clients qualify for an OIC. Call us today to see if you qualify.
The OIC is still a relatively new IRS instrument created in 1992 by Section
7122 of the Tax Code. The two primary grounds under which an OIC can be
successfully negotiated with the IRS are: “doubt as to collectibility”
(e.g. the taxpayer is unable to pay the full burden), or “doubt
as to liability” (e.g. the taxpayer contends that they owe the debt).
There is a more recent third ground for acceptance, “effective tax
administration” (e.g. the IRS wants to get as much as they can,
and they may potentially think that 12 cents on the dollar is as good
as they can do on a taxpayer). For an Offer in Compromise to be accepted,
however, the taxpayer has the burden of proof that they either have no
possible means of paying the tax or that they do not actually owe the
tax.
The primary determinant on “doubt as to collectibility” is
based on a taxpayer’s personal financial profile; including income,
expenses, and assets. The IRS sets strict guidelines for income, allowable
expenses (categorized as: Living, Housing, Transport), and available equity
in owned assets. An additional benefit of submitting an OIC is that IRS
Restructuring Act prohibits the IRS from collecting a tax liability by
levy during the period in which the Offer is being processed, or 30 days
following rejection of an offer, or during the appeal of an OIC. This
window of non-collection is frequently a respite for our clients to avoid
any IRS collection actions, thereby securing additional time for clients
to pay and prevents the IRS from seizing any assets in the interim.
If accepted, payment terms for an Offer in Compromise can be in one of
three methods: cash (typically within 90 days of acceptance), short-term
deferred payment (paid within 24 months of acceptance), or a long-term
deferred payment plan (up to the remaining statutory period for collecting
the tax liability).
Call us if you have any questions about the IRS guidelines or the process
for preparing, submitting, and negotiating an Offer in Compromise at 1-800-455-6829.
Installment Agreement:
Many taxpayers cannot qualify for an Offer in Compromise, Statute of
Limitations expiration, or bankruptcy relief but still seek resolution
for their IRS liability. In these cases, we will work with our client’s
budget and financial profile to negotiate long term IRS payment arrangements.
The IRS allows “structuring” five primary types of payment
plans, or Installment Agreements: Guaranteed Installment Agreements, Streamlined
Installment Agreements, In-Business Trust Fund Agreements, Long-Term Installment
Agreements, and Installment Agreements on Specified Balance Due Accounts.
If you would like to discuss any of your Installment Agreement options,
please give one of our Tax Specialists a call at: 1-800-455-6829.
Tax Lien Solutions: If a taxpayer
has delinquent tax liabilities, the IRS has the power to collect back
taxes by levying a taxpayers' property. A tax lien attaches to all rights,
title and interest of the entity or person being levied. After placing
a tax lien on a taxpayer's assets, the IRS may enforce that lien by levying
a person’s assets. It is important to note that a Federal Tax Lien
by itself does not create a right to any assets or property; state law
determines the rights that taxpayers have in property.
A tax lien is filed by the IRS and is typically recorded with a county
recorder’s office. A lien on an asset, frequently a home, makes
transferring title (e.g. selling the asset) difficult. Liens typically
will have an adverse impact on a consumer’s FICO or credit rating.
There are several solutions in dealing with resolving liens and levies,
including lien releases and ultimately coupling a lien release with another
tax relief solution to resolve the IRS debt which caused the lien.
Levies and
Garnishment Release:
A wage garnishment can result from affecting a levy resulting
from delinquent tax liability. Garnishment rules vary, but essentially
the IRS takes a portion of your paycheck each pay period, and contributes
the amount garnished toward paying off your tax debt. The Garnishment
will remain in place until the tax is paid in full or until a Garnishment
release has been processed.
Having your wages garnished is frequently a stressful
and financially debilitating experience for consumers calling for tax
relief. Our Tax Attorneys and Tax Specialists will work hard to immediately
contact the IRS to release your wages from garnishment, and then structure
a solution to resolve the underlying tax liability – whether that
is an Offer in Compromise, Statute Expiration, or an Installment Agreement.
If your wages are being garnished by the IRS, contact
us immediately to see if you qualify for relief: 1-800-455-6829.
Filing Late
Taxes:
A frequent response from taxpayers who cannot afford the
potential tax liability that will be created by submitting their tax
returns is to become non-filers (stop filing, since they cannot afford
the payments anyway). Our Supervising Tax Attorney believes that it
is almost always in the best interest of the consumer to file, regardless
of ability to pay. While the potential for criminal prosecution for
failing to file a tax return is very small, the economic consequences
are severe – there is a maximum 25% late filing penalty that can
be applied to the tax. Combined with accruing interest, this late filing
penalty can add up to almost 50% of the original liability in many cases.
Many of our clients have not filed properly for a year,
some for over a decade. Our Tax Specialists will work with you to prepare
and file historic returns, even if you no longer have the original records
from the filing years.
Payroll Taxes:
Employers are required to withhold employment taxes from
their employees’ payroll and pay over to the IRS this owed “Trust
Fund Tax.” When small business owners are unable to meet the IRS
obligations, a Trust Fund Tax liability is created. The IRS is aggressive
in enforcement of Trust Fund Taxes, and does not allow Trust Fund Tax
to be discharged in a bankruptcy, no matter how old the tax liability
is. This means that if you owe delinquent Payroll Tax, you must address
the liability and find a solution. Given the complicated nature of Payroll
Tax/Trust Fund Tax, call our supervising Tax Attorney to discuss your
options and find the best course of action to resolve the tax liability.
The IRS reports that approximately 2 million businesses
owe almost $50 billion in Payroll Tax. The IRS is increasing its enforcement
actions, so the probability of facing a lien, levy or other action may
be increasing. To determine if you may have a Trust Fund Tax Liability,
there are two primary determinant tests: whether you are “responsible”
for collecting or paying withheld income and employment taxes, or for
paying collected excise taxes; and (2) whether you “willfully
failed” to collect or perform your obligations.
Typically, the IRS has the right to take enforcement
action against anyone who meets these determinant tests, even if they
were not an officer or employee of the corporation which originally
collected the payroll taxes.
Tax Penalties:
Abatement, or adjustment, of a tax liability means to
reduce or change a tax, penalty, or interest. Most frequently, abatement
refers to eliminating an assessed tax liability and adjustment references
reducing or altering an assessed tax liability. If there is a reasonable
cause for abatement or adjustment, the IRS may be willing to review
the penalties which created a tax liability.
The IRS takes the position that a penalty should not be
asserted if the taxpayer’s liability is as a result of reasonable
cause, and not “willful neglect.” Some frequent definitions
of reasonable cause include: death or illness in the taxpayer’s
immediate family, unavoidable absence, destruction by natural causes
of the taxpayer’s residence, the taxpayer cannot reasonably obtain
the records for liability determination, the non-filing was due to IRS
error, failure by the US Post Office, failure by a competent tax advisor,
civil disturbance, and others. Most frequently, the burden of proof
resides with the taxpayer to prove reasonable cause.
Innocent
Spouse:
There are many basis for abating taxes and assessed tax
penalties, including “Innocent Spouse” determination. Typically,
adjustment/abatement is a means for reducing or deferring a liability
which is used in conjunction with another tax relief method to resolve
the taxes owed. There are three types of Innocent Spouse relief: traditional
Innocent Spouse relief, separation of liability, and equitable relief.
Traditional Innocent Spouse relief is granted to join-filers (typically
married couples) when one spouse was unaware of the erroneous item which
created a tax liability; Separation of liability is primarily for join-filers
who are currently separated, and equitable relief is for a spouse who
should not be held liable and who fails to meet the two preceding determinations.
In each Innocent Spouse determination, the non-electing spouse/partner
will be notified and may participate in the proceedings.
In all of the Innocent Spouse adjustments, the IRS’
goal is to provide relief to the spouse who was unaware or not at fault
for the creation of a tax liability, hence the IRS rules that it would
be inequitable to hold the innocent spouse liable for any tax deficiencies.
If you think you have the potential to request Innocent Spouse relief,
call our tax specialists for a free consultation at: 1-800-455-6829.
Currently
Not Collectable (“CNC”):
If a taxpayer does not qualify for an offer in compromise
and cannot afford to pay an Installment Agreement, Currently not Collectible
(CNC) status may be an option. If a client is placed in CNC status,
the statute of limitations continues to run and the IRS will not pursue
collection actions. However, If a taxpayer’s financial status
improves, the IRS can remove the file from CNC status and return to
active collection status.
Reasons for attempting CNC status:
1. Taxpayer has income below allowable expenses and there
is no indication that the financial situation will improve in the future;
2. Due to high equity, the taxpayer does not qualify
for an OIC and has more allowable expenses than income so an Installment
Agreement is not an option; and,
3. Taxpayer has more allowable expenses than income and
the statute of limitations is getting close to expiring.
|
