Thursday, November 17, 2011

IRS TAX SOLUTIONS -- How to Stop a Tax Levy -- File for a Offer in Compromise




Get a Fresh Start

An Offer in Compromise - Settling with the IRS for Less

You can settle with the IRS for less than your assessed tax liability through a program called an Offer in Compromise. Not everyone is eligible and qualified for an Offer in Compromise. The IRS has a complicated financial formula that takes into account many factors.

If you are struggling financially and you owe a back tax debt to the IRS, you would be foolish not to take a serious look at settling with the IRS. During the Offer in Compromise process, the IRS will cease all collection activity. You will not be levied while your Offer is being considered.

Currently, the IRS has settled 34% of the the Offer in Compromise cases brought to it. Believe it or not, 34% is a significant amount of settlements when you consider how many novice and inexperienced taxpayers try and process their own Offer in Compromise. Couple that fact with the number of taxpayers who file frivolous settlement Offers and 34% seems about right.

The Offer in Compromise Process:

The IRS allows an individual taxpayer, such as yourself, to settle their back tax debt for less because in many cases the IRS will be able to collect more from you now than by continuing enforced collection tactics. 

The IRS will accect your settlement offer if you have "dotted all the i's and crossed all of your t's" in your Offer in Comprise documentation. Also, the IRS will accept your Offer if your settlement amount is "right on the money." The IRS can easily reject your Offer because your paperwork was sloppy or you did not provide them with the proper documentation. The IRS does not have to give you a reason for your rejected Offer. The IRS can simply tell you that your settlement offer was "un-processable."

Are You Qualified and Eligible - Offer in Compromise Requirements:

The IRS only allows taxpayers that meet a specific set of requirements to settle their back tax liabilities. Although there are 3 different categories for an Offer in Compromise, the only one that you should be concerned with is: Doubt as to Collectabilty.

Doubt as to Collectability - When doubt is raised as to whether or not your back tax liability, including penalties and interest, will be paid in full the IRS will consider an Offer in Compromise based on your inability to pay. Right now, in the economic times that we live in, more and more taxpayers are struggling financially. Everyone knows this. It isn't a secret.

The taxpayer will need to show and document to the IRS:
  • You are unlikely to able to pay the IRS more than your proposed settlement offer. The IRS works like a business and you need to prove to them that it is in everyone's best interest to accept your Offer. An Offer in Compromise is based on criteria that a novice taxpayer is privy to. 
  • Will it be feasible to let you, the taxpayer, have time to see if your financial conditions improve. The IRS will be looking to collect as much as they, but, the IRS is also interested in closing cases. The IRS has no shortage of delinquent taxpayers to deal with. Every year there are approximately 20 million taxpayers that have an IRS problem that needs to be resolved.  
  • Would "other people" (taxpayers) perceive, if the Offer in Compromise is accepted, the settlement to be improper? Well, fortunately, we live in a country that believes in giving people a 2nd chance. We live in a compassionate country that realizes sometimes people need a break. It is in the interest of the country to give people a fresh start. 

Additional Requirements for a Successful Offer in Compromise:
  • You cannot currently be going through the Bankruptcy process.
  • You, the taxpayer, must have all of your tax returns filed for the prior years.
  • If you are a business, you must have filed your payroll taxes for the previous 2 quarters.
  • You, the taxpayer, must pay the Offer in Compromise application fee of $150.00 in order for your Offer request to be processed.
  • You must submit the proper documentation to support your Offer in Compromise.


In February of this year (2011) the Commissioner of the IRS, Doug Shulman, announced a relaxation in the requirements for a successful Offer in Compromise. The IRS has a new "Offer program" which they call a "Streamlined Offer in Compromise." If a taxpayer makes $100,000 per year, they are now eligible to settle with the IRS. This is significant. There are other very important changes to the settlement program. Many of these new policies regarding the Streamlined Offer in Compromise program will be reviewed during the upcoming year. But know this, with our terrible economy, many taxpayers have been suffering and the prospects for a quick turnaround are not eminent. The IRS needs to close cases. If your Offer in Compromise is handled professionally and efficiently, your IRS case can be closed.

Reasons Why Your Offer in Compromise May be Rejected:
  • You made an Offer that was deemed to be too low. In other words, you tried to "low-ball" the IRS. Negotiating with the IRS is not like haggling with your dentist or plumber. The IRS has a formula to calculate a successful settlement. If you are not "right on the money" you can forget it and you can start the process all over again.
  • You, the taxpayer, failed to provide the supporting documents. You will be required to provide receipts, pay stubs, bank statements as well as other supporting documents. Should you not provide documents or you provide the requested documentation beyond the deadline given, your Offer in Compromise will be rejected. The IRS will always be looking for a reason to tell you "no way."
  • Have you been convicted of a serious crime? If so, forget about it.
  • You didn't provide the IRS with your application fee and you did not receive a waiver of fees.
  • You are living above what the IRS calls "Allowable Living Expenses." Once again that pesky IRS financial formula comes up.
  • You failed to "dot the i's and cross the t's." In other words, your paperwork was sloppy or you missed an item. Either way, your Offer in Compromise will be deemed to be "un-processable."

I am Dave Rosa, the V.P. of Client Relations at Flat fee Tax Service, Inc. I will be conducting your free and confidential consultation and we can determine, at that time, your eligibility for an IRS settlement through the Offer in compromise program. Be prepared to let us know what your gross month is. Are you married? Does your wife work and if so, what is her gross monthly income? Do you have automobile payments? If so, how much are they? Do you contribute to your health insurance? Do you have term life insurance? Do you have child support payments? How much is your rent or mortgage payment. If you have a mortgage, do you have any equity in your home? How much do you spend on utilities? Do you have a secured loan? Do you have an IRA or 401K? If so, what is the value of your retirement account?

These are some of the questions that I will be covering with you. If you are on a fixed income such as Social Security or Social Security Disability (SSDI), are an hourly worker or your prospects of having any large increase in earnings are nil, then you really owe to yourself and to your family to go through the Offer in Compromise process. A Fresh Start is called for and you can have it but you need to get the settlement process started.

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1 comment:

  1. In our very difficult economic times, more and more taxpayers are struggling to keep up. If you have a tax liability that is owed to the IRS, you may be eligible and qualified to settle you back tax debt through the Offer in Compromise program.


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