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OFFER in COMPROMISE PROGRAM With New Fresh Start Program
(Below is the Actual IRS Announcement)
IR-2011-20, Feb. 24, 2011
WASHINGTON — In its latest effort to help struggling taxpayers, the Internal Revenue Service (IRS) today announced a series of new steps to help people get a fresh start with their tax liabilities.
The goal is to help struggling individuals and small businesses meet their tax obligations, without adding unnecessary burden to taxpayers. Specifically, the IRS is announcing new policies and programs to help taxpayers pay back taxes and avoid tax liens.
“We are making fundamental changes to our lien system and other collection tools that will help taxpayers and give them a fresh start,” IRS Commissioner Doug Shulman said. “These steps are good for people facing tough times, and they reflect a
responsible approach for the tax system.”
(THIS IS GREAT NEWS)
Today’s announcement centers on the IRS making important changes to its tax lien filing practices that will lessen the negative impact on taxpayers. The changes include:
Significantly increasing the dollar threshold when a Federal tax lien is generally issued, resulting in fewer Federal tax liens.
Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
Creating easier access to Installment Agreements for more struggling small businesses.
Expanding a streamlined fresh start Offer in Compromise program to cover more taxpayers who are struggling.
IF YOU ARE STRUGGLING FINANCIALLY
YOU NEED TO LOOK AT AN
IRS OFFER in COMPROMISE
“These steps are in the best interest of both taxpayers and the tax system,” Shulman said. “People will have a better chance to stay current on their taxes and keep their financial house in order. We all benefit if that happens.”
This is another in a series of steps to help struggling taxpayers. In 2008, the IRS announced Federal tax lien relief for people trying to refinance or sell a home. In 2009, the IRS added new flexibility for struggling taxpayers facing payment or collection problems. And last year, the IRS held about 1,000 special open houses to help small businesses and individuals resolve tax issues with the Agency.
This announcement comes after a review of collection operations which Shulman launched last year, as well as input from the Internal Revenue Service Advisory Council and the National Taxpayer Advocate.
Federal Tax Lien Thresholds
The IRS will significantly increase the dollar thresholds when Federal tax liens are generally filed. The new dollar amount is in keeping with inflationary changes since the number was last revised.
Currently, federal tax liens are automatically filed at certain dollar levels for people with past-due balances.
The IRS plans to review the results and impact of the tax lien threshold change in about a year.
A federal tax lien gives the IRS a legal claim to a taxpayer’s property for the amount of an unpaid tax debt. Filing a Notice of Federal Tax Lien is necessary to establish priority rights against certain other creditors. Usually the government is not the only creditor to whom the taxpayer owes money.
A Federal tax lien informs the public that the U.S. government has a claim against all property, and any rights to property, of the taxpayer. This includes property owned at the time the notice of lien is filed and any acquired thereafter. A Federal tax lien will affect a taxpayer's credit rating, so it is critical to arrange the payment of taxes as quickly as possible or take actions to settle your past tax debt.
“Raising the tax lien threshold keeps pace with inflation and makes sense for the tax system,” Shulman said. “These changes mean tens of thousands of people won’t be burdened by liens, and this step will take place without significantly increasing the financial risk to the government.”
Federal Tax Lien Withdrawals
The IRS will also modify procedures that will make it easier for taxpayers to obtain a tax lien withdrawal.
Federal Tax Liens will now be withdrawn once full payment of taxes is made if the taxpayer requests it. The IRS has determined that this approach is in the best interest of the government.
In order to speed the withdrawal process, the IRS will also streamline its internal procedures to allow collection personnel to withdraw the tax liens. You will still be relying on the efficiency of the IRS for better or worse.
Direct Debit Installment Agreements and Liens
The IRS is making other fundamental changes to Federal tax liens in cases where taxpayers enter into a Direct Debit Installment Agreement (DDIA). For taxpayers with unpaid assessments of $25,000 or less, the IRS will now allow lien withdrawals under several scenarios:
Tax Lien withdrawals for taxpayers entering into a Direct Debit Installment Agreement.
The IRS will withdraw a tax lien if a taxpayer on a regular Installment Agreement converts to a Direct Debit Installment Agreement.
The IRS will also withdraw liens on existing Direct Debit Installment greements upon taxpayer request.
Federal Tax Liens will be withdrawn after a probationary period demonstrating that direct debit payments will be honored.
BEFORE YOU AGREE TO AN
IRS INSTALLMENT AGREEMENT
CONSULT WITH AN
IRS TAX PROFESSIONAL
In addition, this lowers user fees and saves the government money from mailing monthly payment notices. Taxpayers can use the Online Payment Agreement application on IRS.gov to set-up with Direct Debit Installment Agreements.
“We are trying to minimize burden on taxpayers while collecting the proper amount of tax,” Shulman said. “We believe taking away taxpayer burden makes sense when a taxpayer has taken the proactive step of entering a direct debit agreement.”
Don't get baited into agreeing to a very bad IRS Installment Agreement because of your anxiety over having the tax lien released.
Installment Agreements and Small Businesses
The IRS will also make streamlined Installment Agreements available to more small businesses.
The payment program will raise the dollar limit to allow additional small businesses to participate.
Small businesses with $25,000 or less in unpaid tax can participate. Currently, only small businesses with under $10,000 in liabilities can participate. Small businesses will have 24 months to pay.
The streamlined Installment Agreements will be available for small businesses that file either as an individual or as a business. Small businesses with an unpaid assessment balance greater than $25,000 would qualify for the streamlined Installment Agreement if they pay down the balance to $25,000 or less.
Small businesses will need to enroll in a Direct Debit Installment Agreement to participate.
“Small businesses are an important part of the nation’s economy, and the IRS should help them when we can,” Shulman said. “By expanding payment options, we can help small businesses pay their tax bill while freeing up cash flow to keep funding their operations.”
CAN YOU SETTLE
CAN YOUR IRS PENALTIES AND INTEREST
A Fresh Start Offer in Compromise
The IRS is also expanding a new streamlined Offer in Compromise (OIC) program to cover a larger group of struggling taxpayers.
This streamlined or Fresh Start Offer in Compromise (OIC) is being expanded to allow struggling taxpayers with annual incomes up to $100,000 to participate. In addition, participants must have tax liability of less than $50,000, doubling the current limit of $25,000 or less.
An Offer in Compromise (OIC) are subject to acceptance based on legal requirements. An Offer in Compromise is a settlement agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. Generally, an Offer in Compromise will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to make a determination regarding the taxpayer’s ability to pay.
WHAT DOES THIS MEAN TO YOU
The IRS did not become "warm and fuzzy" overnight. What this means to you, the struggling American who has an IRS tax liability, is this: you have a golden opportunity to settle your tax debt. The IRS is still going to look for every opportunity to reject your Offer in Compromise. The IRS is still charged with collecting as much money as they possibly can. Knowing that, it is important that your Offer in Compromise paperwork / filing have every "i" doted and every "t" crossed. It is important that all of your documents be in order. It is important that you do not miss a deadline. It is important that your settlement offer be "right on the money."
IF YOU MAKE A MISTAKE
OFFER in COMPROMISE
WILL BE REJECTED NO FRESH START FOR YOU
Yes, anyone can do their own Offer in Compromise. Yes, anyone can get themselves into an Installment Agreement with the IRS. The problem is, will your Installment Agreement be one that is dictated to you by the IRS or will it be based on what you can actually afford? Is your tax liability reduced to its lowest amount due to reasonable cause? Are you what is called "Currently not Collectible?" Are you qualified and eligible for an Offer in Compromise?
THE IRS IS NOT GOING TO BE FORTHCOMING
WITH ANY HELP
It is your responsibility to present the IRS with a complete and honest Offer in Compromise. The IRS will always be looking to reject your Offer. It doesn't matter to the IRS how deserving you are for relief if you paperwork is done incorrectly. The IRS is a bureaucracy and they want the "i's" doted and the "t's" crossed. The IRS want deadlines to be met. The IRS want pristine paperwork. The IRS is not going to "negotiate" your settlement amount.
Your Offer in Compromise settlement is based on a complicated formula based on many factors. Do you know them all? If not, have an experienced Tax professional who has had success with the Offer in Compromise program.
I am Dave Rosa, the V. P. of Client Relations at Flat Fee Tax Service, Inc. I will be conducting your confidential consultation. It is my duty to you, as well as Flat Fee Tax Service, Inc. to provide you with an honest and straightforward evaluation. We do not employ salesmen. There is absolutely no pressure on you. We strive to keep our costs as low as possible so that we may pass those savings on to our clients. We want our clients to have a positive benefit from our tax relief services.