Tax Settlement (Offer In Compromise)
RECENT NEWS: IRS Announces Leniency For Settling Tax DebtOn March 9th, 2010 the IRS Commissioner announced they are ''easing up'' on their rules for settling tax debt, giving more power to their agents to accept tax settlements. If you owe back taxes, there has never been a better time to see if you qualify to significantly reduce the amount you owe. Contact CKTax today! Call us or fill out the short form to the right to request your FREE Consultation.
What is a Tax Settlement?
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A tax settlement is an agreement between the taxpayer and the IRS where the IRS agrees to accept less than full payment on a tax debt owed. In considering a tax settlement, the IRS will take into consideration the financial ability of the taxpayer to pay the tax debt in full, any extenuating circumstances that would create a hardship or valid reasons on why the taxpayer should not be held responsible for the tax liability.
Is a Tax Settlement just that easy ?
No, the IRS will require taxpayer to meet certain qualifications before tax settlement would even be considered, including full compliance with any tax filings. Also appropriate forms will need to be filed. In some types of tax settlements, the IRS will require financial and asset disclosure.Types of Tax Settlements:
Offer in Compromise
An Offer in Compromise is a onetime tax settlement where the IRS agrees to take less than the full tax balance that is owed. There are 3 reasons in which an Offer in Compromise can be submitted:1. Doubt to Liability- Doubt exists that the taxpayer is responsible for the taxes assessed.
2. Doubt to Collectability- Doubt that the taxpayer could pay the tax debt back within the statue of limitations based on the financial ability and assets owned. The majority of Offers are filed under this.
3. Effective Tax Administration- The taxpayers has the assets to cover the tax debt but it would be unfair or inequitable for the taxpayer to liquidate them to pay the tax debt.
There are different terms under which the amount agreed upon can be paid back.
Both individuals and business can submit an Offer in Compromise and most taxes including 1040, 1120, 940, 941 and civil penalties can be compromised.
Click here for more information on an Offer in Compromise.
Partial Payment Installment Agreement
A partial payment installment allows tax payers to enter into an agreement where only a partial payment of that tax balance is paid. There are very strict guidelines including full financial disclosure, forms 433A and 9465. The IRS will require all returns to be filed. A letter must be written asking for the partial payment and a calculation of the payment you can afford. This is not an easy step; you will need to know the amount of tax due including interest and penalties, the statue of limitation and collection potential.
If you have questions on a Partial Payment Installment, click here.Penalty Abatement
Penalty abatement allows the taxpayer to eliminate all or part of penalties owed. A penalty abatement does not eliminate any of the base amount of tax owed. Typically, the IRS will want a legitimate reason or extenuating circumstance on why the taxes were not filing or paying the taxes due on time.For more information on Penalty Abatement, click here.
Innocent Spouse Relief
Innocent Spouse relief is for a taxpayer who filed jointly in the year they are seeking relief. Typically, in a joint return each spouse is equally liable for the tax due. The IRS does recognize that in some circumstances it would be inequitable and unfair to hold a spouse responsible for the tax liability that was created from a joint return. For more information on Innocent Spouse Relief, please click here.Get Started Now!
If you owe back taxes that you can't pay, request your FREE, No Pressure, Consultation by filling out our FREE Consultation Form or calling our offices at 1-888-894-2005.If you have a tax resolution related question, feel free to ask us using our Ask A Question page.
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