Offer in Compromise (OIC)
Offer In Compromise – The “Pennies on the Dollar” program
There is hope. Stop agonizing and take action! If you are agonizing and stressing-out over unpaid tax liabilities which, in many cases, have collected and compounded over the years, it may turn out that your tax liability can be resolved fairly rapidly and with mere pennies on the dollar —legally and completely— providing you with the fresh start that you deserve.
Attorney Paul Staley helps his clients craft and create Offers In Compromise with the IRS. Call to speak to Paul now, or to set up a no-cost consultation to discuss if you qualify for these programs to settle your taxes once and for all!
Owe Taxes but can’t Pay? See If You Qualify To Settle For Less
If you owe back taxes and simply can’t pay all at once —or even over many months— we can find out if you qualify to settle for less using the IRS Offer in Compromise program. Tax Resolution Lawyer Paul Staley is expert at helping taxpayers reduce their tax liabilities through the various state and IRS programs such as the Offer in Compromise program. The federal process of submitting an Offer in Compromise and obtaining IRS acceptance is complex but doable. Securing IRS approval requires persistent attention to detail and compliance with very specific IRS procedures. The difference between approval and denial of your Offer in Compromise is often determined by the knowledge and experience of your tax resolution lawyer who will assist you through the process from start to finish.
A Tax Resolution Lawyer’s experience and knowledge are even more important following the Tax Increase Prevention and Reconciliation Act of 2005 that was signed into law in 2006. Section 509 of this law creates significant changes to the IRS Offer in Compromise (OIC) program by amending IRC 7122. That additional legislation added substantial complexity to the IRS Offer in Compromise program making the submission of an Offer In Compromise ever more difficult. This updated legislation requires a taxpayer to submit a minimum 20% down payment along with the submittal of a taxpayer’s “lump sum offer.”
Careful planning and execution are in order to comply with the new OIC down payment requirements and other procedures specified by the updated legislation. If your Offer in Compromise is accepted, your tax nightmare is finally on the road to recovery and your stress and anxieties will soon be a distant memory.
What is an IRS Offer In Compromise?
An Offer in Compromise (OIC) is an agreement between the taxpayer and the federal government that settles a tax liability for payment of less than the full amount owed (some of your tax debt is totally and permanently forgiven). The IRS will accept an Offer In Compromise when it is clearly demonstrated that the likelihood that the tax liability can be collected in full is not practical, and that the amount offered by the taxpayer is probably as much and the IRS agrees it could reasonably collect from the taxpayer’s assets and disposable monthly income if it were to press forward with painful collection efforts. It is expensive for the government to collect delinquent taxes – therefore the IRS is often willing to agree to a settlement.
The process for determination is referred to as the “reasonable collection potential.” The IRS will approve an Offer In Compromise if it is a reasonable alternative to declaring a case “currently not collectible,” or entering into a long and drawn-out “installment agreement” with a taxpayer. The goal of the IRS is to approve an OIC if they agree that they can collect the amount that it believes to be potentially collectible from a taxpayer in the shortest amount of time with the least cost to the government.
The IRS is incentivised to say YES! to a reasonable offer
The IRS is already the largest collection agency in the world. In 2013, the IRS is being asked to ramp up to become the new collection agency and enforcer for Obamacare which laws might demand $1,000 to $3,000 in penalties to be collected from any American who fails to buy health insurance for themselves and their families. Those who do purchase health insurance will still need to prove to the IRS that their policy provisions meet the approved criteria. The IRS has been authorized to hire 16,000 additional enforcer to address Obamacare. Additionally, tax rates in 2013 are rising to deduce the nation’s debt which means more pressure on all taxpayers to “pony up!” This is motivation to IRS agents to agree to any reasonable offer to clear the books of “old debts.” Finally, the government’s rationale is that these OIC settlements are in the government’s best interest because statistic prove out that following its acceptance of a taxpayer’s adequate offer the result will be to create a “fresh start” for the taxpayer. Statistics also prove that a fresh start will result in more regular compliance with future filing and payment requirements from those taxpayers the IRS grants significant “forgiveness” and discounts.
The IRS is getting busy! – It’s a great time to submit an OIC
With the IRS under fire for playing politics on the 2010 and 2012 elections, and simultaneously tasked with enforcing Obamacare (uncharted teritory for sure), this provides taxpayers in trouble a great window of opportunity for you to prepare and file unfiled tax returns or make offers to settle up unpaid tax liability using an Offer in Compromise. But be warned… Once an Offer In Compromise is accepted, the taxpayer must remain in compliance with all filing and payment requirements for the next five years. That can be a tall order for some taxpayers with busy and complex lives.
Tax Resolution Lawyer Paul Staley’s office can will help you meet those 60-months of compliance. We can make sure that you comply by watching out for all the necessary dates and assisting you with filing your future returns. If your life is so busy that you need constant reminding, just tell us and we’ll help you to stay in compliance with all the dates and requirement. It won’t be all that difficult nor expensive. After all, by the time your OIC is approved, we will already have all your tax data. You will be pleasantly surprised that having a tax law firm compile your future returns is no more expensive that hiring an accountant, a CPA or a professional tax preparer. Not only are as affordable as most any other tax professionals, you get the added benefit that you have all the protections of the “attorney client privilege” which is not possible with an accountant, a CPA, or seasonal tax preparer.
Types of Offers In Compromise
Three different kinds of Offers in Compromise:
- Doubt as to Collectability – Based on your circumstances, there is doubt that you could ever pay the full amount of tax owed. Before the IRS can consider a “doubt as to collectability” offer, it must be demonstrated that the taxpayer must not be able to pay the taxes in full either by liquidating assets or through installment agreement payment guidelines.
- Doubt as to Liability – When it is demonstrated that some doubt exists that the assessed tax is correct, or it can be proven that you do not owe the tax assessed against you. If you and your Tax Representative do not believe that you owe the tax liability, then OIC is submitted for “Doubt as to Liability.” When submitting a Doubt as to Liability OIC-Offer it has to be accompanied with a detailed written statement explaining why the taxpayer believes they are not liable for the tax bill in question.
- Effective Tax Administration (ETA) – When the taxpayer agrees with the delinquent tax amount that the IRS is seeking to collect and might even be able to pay the full amount owed based on assets or income, but for an exceptional circumstance. To be accepted for an Effective Tax Administration OIC, the taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable. The taxpayer or legal representative must submit a “collection information statement,’ various attachments to the statement, and a written narrative fully detailing the taxpayer’s special circumstances and how payment of the full delinquent tax amount would create an economic hardship or would be unfair and inequitable.
Three different payment periods that might be allowed:
- Cash – paid in 90-days or less following acceptance of OIC petition;
- Short-Term Deferred Payment – paid between 90-days and up to 24 months;
- Deferred Payment – to be paid over the remaining statutory period of the tax liability.
Types of Offers In Compromise
For taxpayers who can qualify for an Offer in Compromise, the end result will see some or all of their tax debt forgiven which will resolve their tax problem and provide them a ‘fresh start’ with the IRS. Drafting an effective Offer in Compromise is complicated. The chances for it being accepted will have a lot to do with the knowledge and experience of your tax professional. If you are facing tax debt that is overwhelming and want to get started exploring the many options available to taxpayers in difficult situations, call Tax Resolution Lawyer Paul Staley right now.
Get some help —Make that call!
San Diego Tax Resolution Lawyer Paul Staley, provides a no-obligation, confidential consultation and has appointments available for evenings and weekends. We accept all major credit cards and can make other payment arrangements so that we can help you get your tax problems straightened out without adding additional layers of financial burden on you and your family. To speak to Paul or to schedule a confidential free consultation call (619) 235-9645.