Has your tax debt gotten out of hand? Are you looking for a way to reduce it but don’t know where to start?
A reduced tax settlement is closer than you think.
The team at Blue Tax has decades of experience in successful tax negotiations with the IRS and State tax agencies. If you’d like to find out if you qualify for a tax settlement, contact our offices today by calling (888) 857-4999 or fill out our Free Consultation form.
An Offer in Compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. An Offer in Compromise can reduce tax debt. IRS tax settlements are subject to certain terms and conditions.
The IRS may accept an offer in compromise based on three grounds:
1.”Unable to Pay” – Doubt as to Collectability – Doubt exists that the taxpayer can not ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
- Example: A taxpayer owes $20,000 for unpaid tax liabilities and agrees that the tax she owes is correct. The taxpayer’s monthly income does not meet her necessary living expenses. She does not own any real property and does not have the ability to fully pay the liability now or through monthly installments.
2.”Don’t Owe” – Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.
- Example: The taxpayer was vice president of a corporation from 2004-2005. In 2006, the corporation accrued unpaid payroll taxes and the taxpayer was assessed a trust fund recovery penalty as a responsible party of the corporation. The taxpayer was no longer a corporate officer and had resigned from the corporation on 12/31/2005. Since the taxpayer had resigned prior to the payroll taxes accruing and was not contacted prior to the assessment, there is legitimate doubt that the assessed tax liability is correct.
3.”Special Circumstances” – Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed; however an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
- Example: Mr. & Mrs. Taxpayer have assets sufficient to satisfy the tax liability and provide full time care and assistance to a dependent child who has a serious long-term illness. It is expected that Mr. and Mrs. Taxpayer will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. There is no doubt that the tax is correct.
It is very important to know and understand what aspects of a taxpayer’s situation the IRS is looking for when submitting an Offer in Compromise. This is what our company specializes in. A tax settlement can be obtained today by calling us at (888) 857-4999 or by filling out our Free Consultation form for a free and confidential tax analysis.
Our tax professionals stand by their commitment to put you in the best position possible for your situation.