We all know that two heads are better than one. We often have others proofread our work. Brainstorming a problem is always easier with more than one person on the project. We will even get a second opinion from a doctor on important medical decisions. So, why not do the same thing when it comes to settling your tax debts.
In other words, you would be wise to carefully consider whether you should get the help of a qualified, experienced tax attorney to help you settle your outstanding tax debt. When you think about it, dealing with the Internal Revenue Service (IRS) just sounds frustrating and painful, right? It just makes sense to engage the help of someone who has experience dealing with the IRS on a daily basis.
Debt solutions attorney in Florida Mary E. King, P.L. has the very experience you are looking for when settling your tax debt. After reading this blog, if you have more questions about your own situation, we invite you to call The Law Office of Mary E. King, P.L. We can make sure that your tax issues are resolved efficiently and at the lowest cost to you. Please fill out our online contact form, or call us at 941-906-7585 today.
In this blog, we will discuss the steps you should take when settling tax debt with the IRS, and some things you need to keep in mind when engaging in the settlement process.
How Can I Settle May Tax Debt?
It is actually possible to settle your tax debt for less than you owe the IRS through what is called an “Offer in Compromise.” While you may have heard that an Offer in Compromise is an easy, pay-pennies-on-the-dollar solution for tax debt, it is actually rather difficult to show that you are eligible for an Offer in Compromise.
The touchstone on whether the IRS will entertain an Offer in Compromise for you is whether the IRS reasonably expects that you will not be able to pay the full amount owed based on your financial circumstances. So, in essence, you need to show that a reduced settlement amount is the best the IRS can do in collecting on your debt.
You should note that having an experienced debt solution attorney in Florida to help you make that case would be very helpful.
Steps to Settle Tax Debt
There is a basic framework by which you would ask the IRS for an Offer in Compromise. It is as follows:
Step 1 – Apply for an Offer in Compromise with a Form 656, and pay the $186 application fee. ($186 is currently the fee as of the writing of this blog, check to make sure that number is still accurate.)
Step 2 – Provide full financial disclosure to the IRS, including your income, your expenses, and your assets.
Step 3 – Fill out Form 433-A, the “Collection Information Statement,” if you currently earn wages or are self-employed.
Step 4 – Wait for the IRS to review your submissions and contact you to begin settlement negotiations.
Step 5 – Reach an agreement with the IRS to pay some percentage of the amount you owe, and pay the amount within 2 years.
What Could Help or Hinder My Application?
When asking for an Offer in Compromise, the IRS looks for a few factors and a few red flags to see if you are a good Offer in Compromise candidate.
1. Are current on your tax filings,
2. Have received at least one bill about your tax debt, and
3. Made all of your required tax payments for the current year,
then you will likely be eligible for a possible Offer in Compromise.
1. You have an open bankruptcy proceeding;
2. The IRS finds that you have the means to pay the full amount, using an installment agreement; and/or
3. You have equity in your assets that could be used to pay off the full amount of taxes;
then you will likely not be eligible for an Offer in Compromise.
Things About Debt Settlement You Need to Keep in Mind
1. Penalties and interest continue to accrue, even after you file for an Offer in Compromise. The only time that they stop accumulating is when you have reached a settlement.
2. If you have filed for personal bankruptcy, then tax debts will normally be handled in that proceeding. That is why an open bankruptcy case will hinder your chances of getting an Offer in Compromise. The IRS, in short, will assume that the bankruptcy will take care of your tax debt.
3. If your financial hardship is particularly extreme, you may be able to even get a refund from the IRS on the $186 application fee that you need to pay when requesting an Offer in Compromise.
4. The Form 433-A, mentioned above, is an important document because it serves as the basis for settlement negotiations. Getting a quick picture of your income and outflow is a good way to get perspective on the type of settlement number that is appropriate for you case.
5. With the Offer in Compromise, there is a payment plan option. So, do not worry that you must pay the Offer in Compromise all at once. You can choose periodic payments to the IRS.
6. It will not go well for you if you fail to pay the amount to which you agreed in an Offer in Compromise. The adage “once bitten, twice shy,” applies here. The IRS will be much less likely to work with you, if you defaulted on an Offer in Compromise.
Get the Help You Need by Contacting an Experience Debt Solutions Attorney in Florida
The Law Office of Mary King P.L., a seasoned debt solutions attorney in Florida, offers complete IRS problem-solving services including all areas from tax debt settlement to planning the most efficient tax strategy for individuals and businesses. Call our debt solution attorneys in Florida today to schedule an initial consultation. With years of experience, the Law Office of Mary E. King can make sure that your tax issues are resolved in your favor. Fill out our online contact form, or call us at 941-906-7585.