Get Help with Your IRS Offer in Compromise from a Texas Tax Relief Attorney
If you owe the Internal Revenue Service (IRS) more than you can afford to pay, you may be eligible to submit an offer in compromise (OIC). As the IRS explains, submitting an OIC “allows you to settle your tax debt for less than the full amount you owe. . . . [and] may be a legitimate option if you can’t pay your full tax liability or doing so creates a financial hardship.” A Texas tax relief attorney at Brown Tax, P.C. can assess your eligibility; and, if warranted, submit an offer in compromise to the IRS on your behalf.
Reasons to Consider an Offer in Compromise
There are several reasons why you may want to consider submitting an offer in compromise to the IRS if you are behind on your individual or business taxes. First and foremost, successfully submitting an OIC reduces the amount you owe, and it fully and finally settles your outstanding federal tax liability. As long as you comply with the terms of your offer (as accepted by the IRS), paying the agreed-upon amount will place you back in good standing. Other reasons to consider an offer in compromise include:
Avoiding Tax Levies and Wage Garnishment
One way the IRS collects from delinquent taxpayers is by placing levies on their bank accounts or accounts receivable. For individual taxpayers, the IRS also pursues wage garnishment as a means of collection. Obtaining tax relief through a successful offer in compromise can prevent this from happening.
Avoiding Tax Liens
Submitting a successful OIC can also help you avoid IRS tax liens. Having a tax lien on your property can affect your credit and impair your ability to sell the property, and it is best avoided if at all possible.
Avoiding Interest and Penalties
When you owe back taxes to the IRS, your back taxes accrue interest, and the IRS applies penalties as well. Interest also accrues on these penalties. Submitting a successful offer in compromise resolves your tax debt so that you will no longer incur these additional liabilities.
Moving On from Your Tax Debt
Whether you personally owe the IRS or your business is behind on its federal income or employment tax liability, securing relief through an OIC allows you to move on from your tax debt. Being in debt to the IRS can be stressful, and it can have a variety of financial consequences. For many individual and business taxpayers, submitting an offer in compromise is the best way forward.
Alternatives to Submitting an Offer in Compromise
While submitting an offer in compromise is the best way forward for many taxpayers, this is not universally the case. As a result, when considering an offer in compromise, it is also important to consider the other options you may have available.
Not all taxpayers are eligible to submit an OIC, and even if you are eligible, you may have other—and better—options for resolving your tax debt. When you schedule an appointment at Brown Tax, P.C., some of the other options your Texas tax relief attorney will help you consider include:
Seeking an Installment Agreement
If you are not eligible to reduce your tax liability through an OIC, you may still be eligible to pay off your federal tax debt over time with a payment plan or installment agreement.
Filing an IRS Appeal
If you dispute the IRS’ determination of your (or your business’s) federal tax liability, you can—and should—challenge the IRS’ determination by hiring a Texas tax relief attorney to file an IRS appeal.
Filing for Other Relief from the IRS
Along with offers in compromise and installment agreements, it is possible to seek various other forms of tax relief from the IRS as well. Depending on your (or your business’s) circumstances, your options may include filing an amended return, filing for interest abatement and/or filing for penalty relief.
Seeking Subordination
In some circumstances, it will make sense to pay another creditor before paying the IRS. For example, if you are at risk of losing your home, business equipment or another secured asset, protecting this asset could be your top priority. Seeking subordination of your federal tax debt allows you to deal with this challenge first—before working to resolve your outstanding tax liability with the IRS.
Are You Eligible to Submit an Offer in Compromise?
Not all individual and business taxpayers are eligible to submit an offer in compromise to the IRS. Under the IRS’ offer in compromise program, there are three main eligibility criteria:
1. Are You Unable to Pay (or Would Paying Cause Financial Hardship)?
Taxpayers are only eligible to submit an OIC if paying their full tax liability is impossible or would cause financial hardship. When assessing taxpayers’ liability, the IRS focuses on four primary factors:
- The taxpayer’s income;
- The taxpayer’s expenses;
- The taxpayer’s asset equity (to determine if the taxpayer could sell assets in order to satisfy its tax debt); and,
- The taxpayer’s overall ability to pay.
2. Do You Qualify Based on Your Current Filing Status?
To submit an OIC, a taxpayer must be up-to-date on its federal tax filing obligations and must have made all requisite estimated tax payments. Taxpayers submitting an offer in compromise cannot be in the process of seeking bankruptcy relief, and businesses must make their employment tax deposits for the current quarter and previous two quarters before filing.
3. Can You Submit a Partial Payment with Your Offer?
When submitting an offer in compromise, it is also necessary to submit a partial payment. This can be either: (i) a 20-percent deposit on the total offer amount; or, (ii) an initial payment under a proposed payment plan.
Schedule an Appointment with an Experienced Texas Tax Relief Attorney
For more information about submitting an offer in compromise to the IRS (or the alternatives you may have available), schedule an appointment with an experienced Texas tax relief attorney at Brown Tax, P.C. Call 888-870-0025 or contact us online to start the process today.