You can settle your IRS Tax Debt for a fraction of what you owe. The IRS Offer in Compromise program is a Federal Tax Relief Program for those taxpayers who cannot afford to pay their tax debt due to financial hardship, or have a legal claim and don’t think they owe the tax under the tax code.
1. OFFER IN COMPROMISE – FINANCIAL HARDSHIP
The financial hardship tax relief program is called Doubt as to Collectibility and is the most common way to settle your taxes. Under this tax relief program, you can settle your IRS tax debt for a fraction of what you owe. IRS uses income/expense and asset/equity ratios to determine the settlement amount, based on standards set for taxpayers’ average cost of living, according to their family size and location. If such living expenses are equal to your total income, and your net equity in your assets is less than your IRS debt, you can settle your tax debt with the IRS for less than what you owe.
Example: Husband and Wife live in California with two children and owe $55,000 to the IRS. They cannot make monthly payments towards their debt. Penalties and Interest are accruing on the debt and taxpayers continue to receive notices including Notice of Intent to levy. Taxpayers do not have much equity in their real property, and their monthly income is just enough to pay for their living expenses; hence no disposable income is available to pay the IRS. IRS acknowledges the doubt as to collectibility of the tax and accepts an offer for less than $5,000. Taxpayers no longer owe the tax and the tax liens filed against them are released.
2. OFFER IN COMPROMISE – LEGAL CLAIM
The other Tax Relief program is called Doubt as to Liability and can be used to offset a tax liability if the tax is not legally owed by the taxpayer. The IRS may have erroneously assessed a tax because of mistake or lack of evidence. Upon proof IRS will terminate the tax liability.
Example: Taxpayer inherits assets from a deceased parent’s estate and the financial institution which managed the asset reports taxpayer as the recipient of the asset. Taxpayer does not file the necessary estate tax returns and IRS assesses a $50,000.00 tax and keeps sending demanding letters. A Doubt as to Liability claim is filed because the inherited asset is exempt under estate tax law and not taxable. IRS acknowledges the legal claim and accepts taxpayer’s offer. Accordingly the tax liability is terminated and all liens associated with the debt are released. against them are released.
3. EXCEPTIONAL CIRCUMSTANCES
Exceptional circumstances can persuade the IRS to accept an OIC because the collection of the tax is unfair and inequitable. This is the least common approach for tax relief.
Example: Taxpayer is in his retirement age and owes the IRS $45,000. Taxpayer’s retirement assets are much more than the debt but because of taxpayer’s needs and medical condition he needs to use his retirement assets to pay for his medical and living expenses. Since the collection of the tax would harm taxpayer’s health and general welfare, the IRS accepts taxpayer’s offer and settles the account.
The OIC program is the best Tax Relief program available today with the IRS. An experienced Tax Attorney who has successfully settled hundreds of OIC cases with the IRS can consult with you and advise you on whether you are a good candidate for the offer in compromise program. If you are qualified, it is the best deal you can get with the IRS.
Get started today by calling 415-691-9953.