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Offers in Compromise
So you want to settle your tax debt for "Pennies on the Dollar".
Well there is good news and there is bad news with regard to your potential tax offer.....
The Good News is: It CAN be done. You may very well be able to satisfy your tax debt for a whole lot less than the amount you owe.
The Bad News is: It's not anywhere near as easy as the marketing ads suggest. Not everyone will qualify, but most salespeople will tell anyone they will. Many tax resolution companies will try to convince anyone they will qualify for an offer in compromise so that they can charge them the maximum amount of fees for their case. Remember, even if a person does qualify for an Offer in Compromise, it will take a skilled and experienced professional to ensure their offer has the greatest chance of acceptance.
The professionals at eTaxRelief have years of experience and know how to package your offer the right way. Furthermore, with our company, you speak with one of our licensed professionals before you decide to hire us. Not a salesperson. We will give you straightforward and honest answers, combined with the experience and knowledge it takes to ensure the greatest chance of success for your case.
IMPORTANT: Recent Major Changes were made to the Offer in Compromise Program:
Among the changes are the following provisions:
* A taxpayer filing a lump sum offer must pay 20 percent of the offer amount with the application (IRC 7122(c)(1)(A)).
* A taxpayer filing a periodic payment offer must pay the first proposed installment payment with the application and pay additional installments while the IRS is evaluating the offer (IRC section 7122(c)(1)(B)).
The IRS considers the 20 percent down payment for a lump sum offer, and the installment payment on a periodic payment offer, as "payments on tax" and are not refundable regardless of whether the offer is declared not processable or is later returned, withdrawn, rejected or terminated by the IRS.
Taxpayers may designate the application of the required TIPRA payments. A taxpayer who qualifies for a low-income exception waiver or is filing a doubt as to liability offer is not required to pay the application fee, the 20 percent payment on a lump sum offer, or the initial payments required on a short term or deferred periodic payment offer.
As a result of TIPRA, beginning July 17, 2006 in order to be considered for an Offer in Compromise, a taxpayer must have met all of the following requirements:
* The taxpayer is not a debtor in an open bankruptcy proceeding.
*The $150 application fee, or a signed Form 656-A, "Income Certification for Offer in Compromise Application Fee and Payment" must be submitted.
*The 20 percent payment with the lump sum offer, or a signed Form 656-A, "Income Certification for Offer in Compromise Application Fee and Payment" must be submitted.
*The first installment payment on a periodic payment offer, or a signed Form 656-A, "Income Certification for Offer in Compromise Application Fee and Payment" must be submitted.
An offer that is received with a payment which is less than a 20 percent payment on a lump sum offer will be deemed processable but the taxpayer will be asked to pay the remaining balance in order to avoid having the offer returned.
Taxpayers filing a periodic payment offer are required to submit the full amount of their first installment payment in order to meet the processability criteria. If the full amount of the first installment payment is not provided, the IRS will deem the offer not processable and will return the $150 application fee to the taxpayer.
If during the Offer in Compromise investigation the initial offer amount is determined to be insufficient and not reflective of the taxpayer's ability to pay, the taxpayer will in most instances, be contacted and asked to increase the offer and submit the corresponding 20 percent payment if the offer was filed as a lump sum cash offer, or the periodic payment if the offer is a short term or deferred payment offer.
Application Fee Required for Offer In Compromise - All taxpayers who submit a Form 656, "Offer in Compromise" must pay a $150 application fee except in two instances:
1. The Offer in Compromise is submitted based solely on "doubt as to liability;" or
2. The taxpayer's total monthly income falls at or below 250% of the Department of Health and Human Services (DHSS) poverty income levels.
The $150 application fee and the TIPRA payments must be paid using a check or money order made payable to the United States Treasury. Cash payments are not accepted. A taxpayer should submit two payments: one for the application fee and the other for the TIPRA payment.
Individuals Must File All Federal Tax Returns and Pay Required Estimated Tax Payments The IRS expects a taxpayer requesting an Offer in Compromise to file all delinquent tax returns and pay any required estimated tax payment. IRS will notify taxpayers and provide 30 days to file delinquent returns or make the required estimated tax payments. Failure to comply will cause the IRS to return the offer back to the taxpayer. The $150 application fee along with all TIPRA payments previously paid will be retained by the IRS and applied to the taxpayers liability.
Businesses Must File All Federal Tax Returns and Timely Pay all Required Federal Tax Deposits Businesses that have employees are expected to have paid all required federal tax deposits for the current quarter in order for their offer to be evaluated. If the IRS determines that the required deposits have not been paid, the taxpayer will be provided with a reasonable amount of time to pay the deposits before the IRS proceeds with the investigation. In addition, the business will be expected to remain current on all filing and deposit requirements while the offer is being investigated.
Failure to either pay the deposits as requested, remain current with filing or pay all deposits that become due while the offer is under investigation will cause the IRS to return the offer back to the taxpayer. The $150 application fee along with all TIPRA payments previously paid will be retained by the IRS and applied to the taxpayers liability.
Statute of Limitations for Assessment and Collection is Suspended - The statute of limitations for assessment and collection of a tax debt is suspended while an Offer in Compromise is "pending," or being reviewed.
The Offer in Compromise is pending starting with the date an authorized IRS employee determines the Form 656 Offer in Compromise is ready for processing. The Offer in Compromise remains pending until the IRS accepts, rejects, returns or acknowledges withdrawal of the offer in writing. If a taxpayer requests an Appeals hearing for a rejected Offer in Compromise, the IRS will continue to treat the Offer in Compromise as pending. Once the Appeals office issues a determination in writing to accept or reject the Tax Offer in Compromise then the pending status is removed.
Taxpayers Must File and Pay Taxes - In order to avoid defaulting a Tax Offer in Compromise once accepted by the IRS, taxpayers must remain in compliance in the filing and payment of all required taxes for a period of five years or until the offered amount is paid in full, whichever is longer. Failure to comply with these conditions will result in the default of the Offer in Compromise and the reinstatement of the tax liability.
Call (877) ETAX-FIX (382-9349) to see if you qualify for an OIC.
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The eTax Relief Team
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Christopher R. Jacquez, EA, CEO
Christopher is an Enrolled Agent licensed by the United States Department of Treasury to represent Taxpayer's before the IRS. With nearly fifteen years of experience in tax controversy, preparation and planning, he is recognized as one of the leading experts in his field. Mr. Jacquez, truly has the in-depth experience it takes to succesfully represent his client's before the collection and exam divisions of the IRS and various State Agencies. If you currently have, or are being threatened with back taxes, a wage garnishment, a bank levy or worse, Christopher can provide the friendly and guiding hand that brings your problems to resolution. Christopher takes pride in his firms personal and dedicated approach and values his relationships with his client's and business associates alike.
Over the course of his career, Christopher has successfully built and operated his own tax practice as well as provided valuable support for established CPA firms throughout the city of San Francisco and Silicon Valley. In addition to tax compliance and representation, Christopher appears as a regular guest at public seminars on the tax aspects of real estate transactions and related activities.
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David M. Jacquez, EA, CFO
David has been an EA since 1981 and has been preparing tax returns since long before the computer age. He has succesfully resolved his clients tax issues for over 25 years and has extensive knowledge when it comes to taxes and real estate. David is involved in the management of eTaxrelif.com and is a major asset to the firm. In addition to the tax and management services that David provides for the company, he is also a California Real Estate Broker and handles many real estate transactions for clients in California. If you have a tax lien on your real property David is the gentleman to speak to.
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Carrie is our adminstrative guru. She is an excellent office manager and offers wonderful support to our clients. Carrie is a California Certified Tax Consultant and prepares tax returns for our firms individual client's.
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