Offer in Compromise
An Offer in Compromise is an offer to settle tax debt with the IRS or state for less than the full amount owed. IRS Form 656 must be filled out in full and submitted along with 20% of the amount offered to settle the debt. Offers in Compromise on the state level require a form similar to that used by the IRS, but the amount that must be remitted with the offer may vary from state to state.
Offer in Compromise forms are detailed accounts of your income, expenses, and a listing of assets that you may own. If an Offer is turned down, usually an appeal can be filed. However, many offers are turned down that could have been successful if the correct actions had been taken prior to filling out and submitting the form. Unfortunately many individuals who file on their own are not aware of the best way to set up their situation prior to filing. When we are retained to do an Offer in Compromise,we first collect all of the information we need regarding your case. We will then advise you on actions to take so that we can effectively minimize the amount we are able to offer and get accepted. Only then do we prepare and submit the offer. We have saved our clients hundreds of thousands of dollars by correctly setting up the case prior to submitting an offer.
It may be possible to set up a payment plan with the IRS or state that you can afford and that will prevent levies (garnishment of bank account or wages) and also prevent future liens from attaching to property. This is something we routinely do for our clients.
Currently Not Collectible
In some cases, depending on your situation and finances, we may be able to secure you the status of CNC or Currently Not Collectable. What this means is although your tax debt has not been forgiven, you are not currently liable for what you owe, and the IRS or state will cease any collection activity on your account.
Innocent Spouse Protection
In some cases your spouse may have taken, or failed to take, certain actions regarding your taxes that you were unaware of, that has created a problem for you. If this is the case, there may be things that can be done to lessen your burden.
- If you filed a joint return that incorrectly reported the amount of tax owing as less than the amount actually owed, and that mistake can be attributed to your spouse’s error;
- and if you are able to show that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax;
- and if taking into account all the facts and circumstances, it would be unfair to hold you liable for this mistake;
you may qualify for Innocent Spouse Protection. There are also other ways we may be able to reduce your tax liability if you feel that you are unfairly indebted to the IRS for assets, monies earned, or mistakes, that were not your own.
Chapter 13 Bankruptcy
Many times IRS and state taxes can be handled through a Chapter 13. If you owe taxes that are several years overdue, penalties and interest may comprise a large part of what you currently owe. Some tax years may be dischargeable in full, meaning that they are eliminated through the process of the bankruptcy. Other tax years, though not dischargeable, may be paid through the Chapter 13 Plan. Doing so can have a distinct advantage. Tax penalties are eliminated in Chapter 13. This can sometimes reduce the tax burden substantially.