Do Not Let Tax Debt Take Over Your Life
If you owe a substantial amount of back taxes and IRS penalties, you are not alone. In fact, the situation is quite common and has led the IRS to accept from taxpayers offers to settle the debt at less than the full amount owed. These are known as “offers in compromise” or OICs.
The process of submitting an offer in compromise and obtaining IRS acceptance of the offer is complicated. Making a successful offer in compromise requires significant skill and full compliance with IRS regulations, procedures and guidelines. The experience, skill and judgment of your representative can make the difference between approval and rejection of your offer.
At Brown, PC, our offers in compromise on behalf of clients are well thought out and analyzed from every angle before being presented to the IRS. We have succeeded in helping clients in Texas and throughout the U.S. get through serious tax problems, and we are ready to do the same for you.
Why Would the IRS Accept Less Than You Owe?
The IRS will generally accept an OIC when it is unlikely that the tax liability can be collected in full and the amount offered equals at least the amount that the IRS calculates that it can collect from the taxpayer.
The IRS goal in approving an OIC is to collect the amount that it believes to be collectible from a taxpayer as quickly and economically as possible. Further, the IRS hopes that its acceptance of an offer will give the taxpayer a fresh start toward compliance with all future filing and payment requirements. Once an offer is accepted, the taxpayer must remain in compliance with all filing and payment requirements for the next five years.
When Might an OIC Be Accepted?
There are three scenarios in which an offer in compromise becomes a realistic option. These are:
- Doubt as to collectibility: Doubt exists as to whether you could ever pay the full amount of tax owed. Appropriate collection information statements along with all required supporting documents must be submitted in order to have the IRS consider a doubt as to collectibility offer in compromise.
- Doubt as to liability: Doubt exists as to whether the assessed tax is correct. This method only applies if you can prove that you do not rightfully owe the tax assessed against you. It does not apply when you are simply unable to pay the tax liability.
- Effective Tax Administration (ETA): An ETA offer is made when a taxpayer agrees with the delinquent tax amount that the IRS is seeking to collect and would be able to pay the full amount owed, but exceptional circumstances exist that would make an IRS acceptance of the offer appropriate. To be eligible for an ETA compromise, you must demonstrate that the collection of the tax would create economic/financial hardship or would be unfair and inequitable.
If the IRS accepts any of the above types of offers, the taxpayer will be held to one of three possible payment periods:
- Cash: If paying in cash, the offer amount must be paid in full 90 days or less after the IRS accepts the offer.
- Short-term deferred payment: Under this option, you make your payments for anywhere between 90 days and 24 months.
- Deferred payment: Payment may be extended for as long as the collection statute of limitations allows.
After an Offer is Made
After the offer has been submitted by our skilled tax attorneys, and the IRS has completed its review, you will be notified that the IRS has accepted or rejected the offer. If the offer in compromise is rejected, you have a variety of alternatives available. For example, you can appeal to the IRS Appeals Office, and ultimately, the United States Tax Court, propose an alternative collection method (for example, an installment agreement) or seek to be classified as Currently Not Collectible. On the other hand, if the offer is accepted, you must make the payments proposed in the offer and the remaining amount of the tax liability will be forgiven.
When you enlist the services of Brown, PC, our experienced and dedicated Texas tax lawyers will be by your side for the duration of your dispute with the IRS. We will fully analyze your situation and prepare an offer in compromise that has the greatest chance of success. If denied, we are prepared for any resulting litigation that may be necessary.
Let Our Fort Worth Legal Team Help Settle Your Tax Debt
For a free, confidential consultation to discuss your tax liabilities with an experienced lawyer, please call 888-870-0025 or contact our law office online. We represent businesses and individuals in high dollar tax controversies across the country.