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Settle Tax Debt For “Less Than What Is Owed”

You’ve probably heard the commercials claiming to settle tax debt for less than “what is owed,” but beware:  While tax debt may be settled for less than “what is owed,” this is the exception and not the general rule.

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.

In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property.  The RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.

A tax lawyer can analyze your unique situation and utilize strategies that optimize your chance of the IRS’s acceptance of an OIC.

Avoid Payroll Tax Debt

The IRS has the ability to “pierce the corporate veil” and assess certain business taxes to individuals.  These taxes are called Trust Fund taxes and include, among others, payroll tax. We may be able to help you avoid the personal assessment altogether. In certain cases, we can set up a resolution that will keep the IRS collecting from you personally.

Leveling The Playing Field During An IRS Audit

An IRS audit may be the beginning of a difficult process that can lead to tax penalties and potentially criminal prosecution.  IRS agents are adept at getting taxpayers to talk themselves into trouble.  A tax attorney can assist you by managing the audit while minimizing the strain an audit puts on you or your business.

Eliminate Tax Penalties

The IRS has a wide range of circumstances that are considered “Reasonable Cause Criteria for Penalty Abatement.”  If any of the following have contributed to your tax accrual, you may be eligible for penalty relief:

Ignorance of Law, Forgetfulness, Mistake, Death, Serious Illness or Unavoidable Absence, Inability to Obtain Records, Statutory Exceptions, Undue Hardship, Written and Oral Advice from the IRS, Advice from a Tax Adviser, Fire, Casualty, Natural Disaster, or Other Disturbance.

We will prepare and submit your Penalty Abatement request and go through the proper channels within the IRS to give you the best chance of penalty relief.

Affordable Monthly Payments

A tax attorney can help you obtain an affordable monthly installment plan and stop the IRS from garnishing your pay and seizing your assets as long as you make your payments.  Often, an Installment Agreement can be made together with Penalty Abatement, see above, thus reducing your overall liability, creating a payment plan you can afford, and stopping the IRS from taking any further collection action against you.

Protecting An Innocent Spouse

A taxpayer filing a joint tax return is strictly liable for the income tax debt of their spouse unless the individual can qualify for innocent spouse relief.  To qualify, the taxpayer must show that the couple filed a “joint return,” that the return contained an understatement attributable to “erroneous items” of the other spouse, and that in signing the return, the “innocent spouse” did not know or have reason to know of the understatement. If you have filed jointly with a spouse at any point in time, and are being pursued by the IRS, we can help you qualify for innocent spouse protection and provide the tax relief you deserve.

Resolving Liens, Levies and Wage Garnishment

If you are delinquent in payments owed to the IRS, the US Treasury has the right to place a legal claim on your bank accounts and other property.  We can help you to resolve this problem so that you can protect your assets and income.

Filing Old Tax Returns

Until you have filed all legally required tax returns, the IRS will not entertain any type of tax settlement or payment plan to settle your back taxes.  Regardless of what you have heard, you have the right to file your original tax return, no matter how late it’s filed.  We can help you file all delinquent tax returns and get you back into compliance with the IRS.

Bankruptcy

Sometimes, despite best efforts, it is just not possible to pay all outstanding debts in full. Tax debts may be eligible for discharge under Chapter 7 or Chapter 13 of the Bankruptcy Code.  We can help you plan a bankruptcy to obtain relief.

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