Over the years as I have been representing clients who have IRS problems, the IRS has been strict in its official requirements for accepting an Offer in Compromise (OIC). However, over the past year, with the downturn in the economy, the IRS has relaxed its unofficial position on its requirements for accepting an OIC, as well as other tax debt settlement options. Therefore, I have seen more taxpayer clients who have been able to qualify for an Offer in Compromise.
Generally speaking, an Offer in Compromise is where the IRS accepts less money than the taxpayer owes to settle their outstanding liability with the IRS. The IRS will only accept an OIC when all other tax collection alternatives have been exhausted. Other IRS tax collection alternatives may be a short extension of time to pay, an installment agreement (making monthly payments until the debt is paid in full), full payment of the debt or hardship status. Hardship status is where the taxpayer is unable to pay anything against their tax liability at the present time. It is usually a temporary solution due to unemployment or illness. Finally,... ...read full post
It is sometimes possible to wipe your tax slate clean at an enormous discount. If you qualify for something known as the
offer in compromise, referred to as an "offer" or "OIC," the IRS has been known to accept as little as 1% of the amount owed on a tax bill and call it even.
There is no legal right to have a valid tax bill reduced by the IRS -- it is entirely a matter of government discretion. In all but a few instances, however, the IRS must at least give a properly submitted OIC fair consideration. Unfortunately, fewer than half the OICs submitted are accepted by the IRS, although you do have the right to take a rejected OIC to the IRS Appeals Office.
OIC Process Submitting an offer to the IRS is a formal process -- you can't simply call the IRS and say "Let's make a deal." You start by completing IRS Form 656, Offer in Compromise.
There is a $150 application fee for filing an OIC, which you must attach to
Form 656. You might be exempt from the fee if your monthly...
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Are You Getting What You Deserve?
There is approximately two weeks until income taxes must be filed with the Internal Revenue Service, and they are doing what it takes to get the word out about earned income tax credit to taxpayers.
They want everyone who is eligible for this credit to have full access to the information needed to receive what the government is providing to them.
$59 billion was claimed by 26 million taxpayers last year, and that included close to 135,000 residents of Nebraska whose share was greater than $278 million.
However, the IRS indicates that 20 percent of those qualifying for the earned income tax credit are not asking for it.
IRS spokesman Christopher Miller stated, “We’re currently hitting four out of five families that are eligible, and we’d like to make it five out of five.”
He also said that the impact of the recession, which includes job losses, hours and pay cuts could mean that there will be even greater numbers of families who will be eligible this year.
Qualifying factors that will allow individuals as well as families to claim earned income credits are as follows: a single filer having no children is limited to adjusted gross income of $13,460, and...
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Do you have any credit cards that charge you 47.5% interest? If you answered “No ”…Don’t be so sure. ..you might end up paying the government this much in interest and penalties?
Did You Not File at All? If you didn’t file taxes this past year (or any other year for that matter), interest is being compounded daily on what you owe – the quarterly federal short-term tax rate, plus 3%. As of this writing, the IRS is charging 8% per year. Non-filers also pay a .5% late payment penalty plus a 4.5% late filing penalty, for a combined penalty of 5% for the first month your return is late. Every month that you don’t file – your penalties double…until 5 months when it caps at 47.5% (22.5% late filing penalty + 25% late payment penalty).
What You Should Do If You Haven’t Filed. By all means, file your taxes…even if you can’t afford to pay the tax that’s due. Here’s why: Every day you don’t file you’re getting charged the huge non-filing penalty I’ve described in the section above.
By filing your taxes and not paying them, you’ll at...
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