Federal IRS Tax Lien An IRS Tax Lien is a legal claim on your property for the amount owed. An IRS tax lien is also the legal right to collect on the amount owed. An IRS Tax lien starts when a tax is assessed and you don’t pay it. For example, if you file a
Offer in Compromise
How To Settle Your Tax Liability For Less Than the Full Amount Owed
An Offer in Compromise (OIC) is a formal, written agreement between a taxpayer and the IRS to settle a tax liability for less than the full amount owed. Many states have a similar program. An OIC can be based on “Doubt as to Collectability” (the taxpayer proves he or she is not capable of repaying the debt in full), “Doubt as to Liability” (the taxpayer proves that there is some doubt as to whether the taxes should actually be owed) or “Effective Tax Administration” (typically the taxpayer proves some kind of hardship that warrants a tax settlement).
An Offer in Compromise is a settlement with the Internal Revenue Service (or state taxing authority) for less than the full amount owed. Usually, it is based upon doubt as to collectability (a financial demonstration that you do not have the ability to full pay your tax liability within a reasonable amount of time). The Internal Revenue Service uses a formula to determine an acceptable settlement amount. A cash offer may be made in which the taxpayer pays the settlement amount in full within 5 months of acceptance. Taxpayers who cannot afford to pay the lump sum cash settlement amount within 5 months of acceptance may be eligible for a periodic payment arrangement whereby the settlement amount is paid off with up to 24 monthly payments.
In addition to “Doubt as to Collectability” Offers, Offers may also be approved based on “Doubt as to Liability” (establish that there is some doubt as to whether the taxes should actually be owed) or “Effective Tax Administration” (demonstrate a hardship).
You may be eligible for an Offer in Compromise and not know it. Aggressive government collection agents might not tell you that you are eligible. Or, a seemingly friendly government agent may offer to “help” you prepare and process your own Offer in Compromise. The IRS will then frequently use its own formula against you to either reject your Offer or force you to settle for more than you should.
Our tax attorneys know how to present an Offer in Compromise so that it has the best chance of being accepted. Equally as important, they know when and how to dispute the IRS when rejection of an Offer is recommended. They also know when and how to dispute the settlement amount that the IRS wishes to approve. There have been countless times when our involvement caused the acceptance of Offers that the IRS had attempted to reject. Likewise, there have been countless times when we convinced the IRS to accept a much lower amount than they had demanded.
At Fortress, We Screen ALL of our Clients for an Offer in Compromise
We love saving our clients as much money as possible and, oftentimes, an Offer in Compromise is the best vehicle for saving BIG dollars. If you are not eligible for an Offer in Compromise, we may be able to help you become eligible. If you are eligible, we will professionally prepare your Offer in Compromise and aggressively negotiate with the appropriate government employee towards the approval of a favorable settlement.
For more information, refer to our article on The IRS Fresh Start Initiative.
Request a Free Consultation from one of our professional tax attorneys.
TAX Attorneys vs Accountants
Which is Best for You?
When the Internal Revenue Service created the Offer in Compromise program, the candidates they probably had in mind were those people who were struggling to keep the lights on, feed and clothe themselves and their children, and keep a roof over their heads. The ideal candidate, they most likely surmised, is not a for-profit business.
One of the most frustrating situations my clients confront is the IRS’s addition of large amounts of tax or Civil Penalties to tax periods that ended a long time ago. There can be several reasons for additions to tax or Civil Penalties, but the most common ones I encounter are reporting and reconciliation deficiencies across