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Tax Settlement

There are three different ways to resolve outstanding Internal Revenue Service (IRS) back taxes. Saedi Law Group has successfully resolved back tax cases for individuals and businesses and provides a confidential case review.

Offer and Compromise Program

What is an Offer in Compromise?

The Internal Revenue Service (IRS) has a program called the “Offer in Compromise” for taxpayers that are living with financial hardship and who are unable to pay their back taxes. Eligible taxpayers can settle their back taxes and get a fresh start.

Can Anyone File an Offer in Compromise?

No. The Offer in Compromise program is not designed for everyone. The purpose of the program is to help those who are truly struggling and can’t pay their taxes in full or over time on an Installment Agreement.

How Do I Determine If I am Eligible for an Offer in Compromise?

Before you file an Offer in Compromise there are a number of different factors that you need to evaluate such as: income vs. expenses; equity in assets; dissipated and transferred assets; future income; tax compliance; and, other factors regarding your personal situation. Consulting with an experienced tax professional can help determine your eligibility and the basis for your offer.

How Much Do I Need to Pay for My Offer in Compromise?

When you file an offer you must pay a filing fee and then your offer amount. Your offer amount should be based on what the IRS calls your “reasonable collection potential” (RCP). In short, your offer is based on whether you can afford to make payments to the IRS and how much equity you have in assets.

How Much Do I Need to Pay for My Offer in Compromise?

When you file an offer you must pay a filing fee and then your offer amount. Your offer amount should be based on what the IRS calls your “reasonable collection potential” (RCP). In short, your offer is based on whether you can afford to make payments to the IRS and how much equity you have in assets.

Are There Fees to File an Offer in Compromise?

Yes, the IRS charges a $150.00 filing fee.

How Much Do I Need to Pay for My Offer in Compromise?

When you file an offer you must pay a filing fee and then your offer amount. Your offer amount should be based on what the IRS calls your “reasonable collection potential” (RCP). In short, your offer is based on whether you can afford to make payments to the IRS and how much equity you have in assets.

What is the Offer in Compromise process?

The Offer in Compromise process is done by completing the necessary financial forms, providing supporting documentation, and working with an IRS offer examiner in reviewing and negotiating the final terms.

Do I Have to Go to Tax Court for My Offer in Compromise?

No, in the majority of cases taxpayers never go to court, the process is conducted through the mail and over the phone.

Why Not Just File Bankruptcy to Get Rid of My Back Taxes?

In some situations filing bankruptcy can be a means of resolving your back taxes. However, tax debt has to be a certain age before it is eligbile for discharge in bankruptcy and you may not be able to discharge in bankruptcy certain types of taxes, like payroll taxes.

What Happens to Collection Activity When I File An Offer in Compromise?

When you file an Offer in Compromise IRS collection activity will stop pending review. Thus, the IRS is suppose to refrain from wage garnsihments and bank levies while your offer is being reviewed.

Do I Need an Attorney to File an Offer in Compromise?

The Offer in Compromise program does not require a taxpayer to have formal representation to submit an offer. However, as with most legal matters having an attorney can help you.

Currently Not Collectible Status

What is a Currently Not Collectible Status?

The Internal Revenue Service (IRS) has a program called “Currently Not Collectible” for taxpayers that are having a financial hardship and can’t afford to pay their back taxes where the taxpayer’s account is placed on hold or in suspense to be reviewed at a later date for possible collections.

Does a Currently Not Collectible Status Settle the Back Taxes?

No.

Can Anyone Obtain a Currently Not Collectible Status?

Everyone’s financial situation is different. Thus, for those individuals that cannot afford to pay their back taxes on an IRS Installment Agreement, but on the other hand do not qualify to settle their taxes through an IRS Offer in Compromise may be able to resolve their back taxes by having their account placed on a currently not collectible status.

Is a Currently Not Collectible Status Permanent?

No, a currently not collectible status is a temporary hold or suspension of IRS collection activity due to the taxpayer’s financial hardship. Thus, the IRS is entitled to revisit the taxpayer’s situation after the taxpayer is placed on this status to see if the taxpayer’s financial situation has improved and the taxpayer is able to make payments to towards the back taxes.

Will the IRS Keep a Taxpayer's Refund?

Yes, as long as a taxpayer owes back taxes the IRS will keep the taxpayer’s refund and will apply it to their back tax debt.

Will Interest and Penalties Continue to Accrue?

Yes, interest on the outstanding tax debt will continue and any related penalties, such as the failure to pay penalty, will continue to accrue as well.

Will My Taxes Eventually Expire?

Yes, the IRS can only collect back taxes for a limited amount of time (statute of limitations) and while a taxpayer is on a CNC status the clock on the expiration date continues to run. So, if a taxpayer remains on a CNC status up to the expiration date, then the taxes will drop off and expire and the IRS will no longer make efforts to collect the old back tax debt.

Does a CNC settle your taxes?

No, a currently not collectible status does not settle someone’s taxes it is an alternative to the Offer in Compromise program.

Will IRS Collections Stop While on a Currently Not Collectible Status?

Yes, once a taxpayer is on a currently not collectible status the IRS will refrain from phone calls, notices, wage garnishments and bank levies. Yet, the IRS may file a federal tax lien to secure it’s interest and will send periodic statements showing the balance owing.

What is the Benefit of a Currently Not Collectible Status?

In summary, the currently not collectible status will remove a taxpayer’s account out of collections (no wage garnishments, bank levies, etc.) and will allow the taxpayer to focus on meeting their personal expenses without incurring further hardship. Also, if a taxpayer remains on this status through the date the taxes expire, then the back taxes will be resolved.

Installment/Repayment Agreement

What if I can't pay my taxes?

In the event that you are unable to pay your taxes in full, don’t despair as you may have the option to establish an Installment Agreement. An Installment Agreement is a monthly payment plan with the IRS. The amount of your payment depends on a number of different factors such as the amount of your back taxes, the number of months for the agreement, and your financial situation.

How much of a payment?

The IRS has certain guidelines for installment agreements and wants taxpayers to pay their taxes in full as soon as possible. Your payment will depend on how much you owe.

If your tax debt is is less than $25,000 the IRS requires less information and disclosure from a taxpayer in setting up an installment agreement, as long as the proposed payment satisfies their internal guidelines. These types of installment agreements are often referred to as “streamlined installment agreements”.

If your tax debt is more than $25,000 the IRS requires more disclosure from a taxpayer. In such a case, a taxpayer should be cooperative, but should be careful not to give inaccurate information and to be aware of the IRS tables and guidelines for expenses. Failure to provide accurate financial information could result in a high payment that a taxpayer cannot realistically afford and could cause the taxpayer to default on their installment agreement and go right back into collections.

What if I ignore my tax bill?

The IRS has special departments and individuals who specialize in collecting back taxes. At first the IRS will send reminder notices and will place phone calls, but if the notices go unanswered the IRS collection efforts will become serious. The IRS has very broad collection powers and can issue bank levies and wage garnishments in effort to collect back taxes. Therefore, it is best to be proactive with your situation to avoid such collection activity by establishing a protective installment agreement.

What should I be aware of once on an installment agreement?

After your installment agreement has been established you will receive specific payment instructions and it is important to make your payments on time each month. Additionally although you an installment agreement will give you time to repay your taxes the sooner you pay them off the less that any related penalties and interest will accrue. Also, the IRS may issues a Notice of Federal Tax Lien and will keep future tax refunds until your tax debt is paid off. Last, you will need to remain current with your tax filings to ensure that you don’t have this problem in the future.

FOR MOST PEOPLE, RECEIVING AN IRS COLLECTION NOTICE CAN BE TERRIFYING. DON’T HIDE FROM THE IRS. OUR ATTORNEYS CAN REVIEW YOUR FILE AND HELP YOU GET BACK ON TRACK WITH YOUR TAX LIABILITIES BASED ON YOUR BUDGET.

Can You Really Settle Your Tax Debt with the IRS for Pennies on the Dollar?
We have seen or heard the ads that promise that you can settle your tax bill for “pennies on the dollar.” All you have to do is hire the law firm in the commercial and they will use their special negotiating skills and inside knowledge to get you off the hook with the IRS. While yes you can settle with the IRS typically it is only where a taxpayer clearly does not have the assets and/or income to pay off the tax debt in a reasonable time.

How long does the tax settlement take?
That depends on the taxpayer. Some offer and compromises may take 6-8 months while others can be expedited if you have a good reason. Once our team reviews you specific set of facts we can provide a reasonable time frame.

Does bankruptcy remove taxes?

In some circumstances yes but even if they don’t we may still have options to deal with the IRS.