Category: Taxpayer Representation

IRS announces Taxpayer Relief Initiative to help those financially impacted by COVID-19

The IRS is following up on their People First Initiative from summer 2020 with some new administrative program changes to make life a little easier for taxpayers that owe back taxes and are not in a position to immediately repay those tax debts. While these are not new programs, the IRS is attempting to make it easier for taxpayers to take advantage of the existing programs, by increasing access to relief.

Under this new initiative:

  • Taxpayers now have 180 days to pay tax debts on a short-term payment plan, up from 120 days.
  • For taxpayers already paying on a previously accepted Offer in Compromise, the IRS is now offering some flexibility on the payment terms of that accepted offer.
  • Individuals with an existing payment plan on a tax debt will automatically have new tax debt balances tacked on to their existing payment plan.
  • As per March 2020 changes to the Internal Revenue Manual, certain individuals with income tax debts less than $250,000 no longer need to submit financial documentation in order to obtain a payment plan. This option is only available via call center staff, not cases that are assigned to field agents.
  • For individuals that only owe 2019 tax debt, and owe less than $250,000, the IRS may agree to not file a Notice of Federal Tax Lien (NFTL) against the taxpayer.
  • IRS is now allowing some individuals with existing Direct Debit Installment Agreements to use the IRS website tool (Online Payment Agreement) to modify their payment plan to lower their monthly payments.

If you owe back taxes to the IRS, you may qualify for these simplified options to take care of your tax problem.… Continue reading

The Simple Truth About IRS Offer in Compromise Fees

Most tax resolution companies give you a quote for services based primarily on three things:

  1. How much you owe the IRS
  2. What kind of taxes you owe
  3. How much the sales person thinks you can afford to pay THEM

Here’s a dirty little secret of the tax resolution industry that nobody else will tell you: The actual WORK required to resolve a case has very, very little to do with how much you owe or what kind of tax it is, and obviously nothing to do with how much of a fee you can pay for representation.

What makes a tax resolution case more complex has much, much more to do with other factors, such as:

  • the existence of other creditors
  • the status of your assets
  • whether or not there are existing levies or wage garnishments
  • how long you’ve been accruing a tax liability
  • your past efforts (or lack thereof) to resolve the issue
  • your ability to file missing returns quickly
  • whether or not your accounting is up to date
  • whether or not you are able to “stop the bleeding” and become current with present day filing and payment requirements (this is actually the single biggest factor)

Most companies have a minimum fee quote for doing an Offer in Compromise for you, and it’s generally higher than for doing a payment plan, because the OIC process takes 6 to 12 months from start to finish. Most reputable firms will charge you anywhere from $3500 to $5000 for doing a basic Offer in Compromise for you, and this may or may not include filing appeals and dealing with levies, and most definitely does not include filing any tax returns for you.

Here’s the thing, though: Filing an Offer in Compromise is actually pretty simple, and the size of your tax debt and the tax type does NOT make it any more difficult. It’s the same form, the same financial analysis, whether you owe $14,000 in personal income taxes or you owe $4.5 million in unpaid employment taxes. Big surprise: The detailed financial analysis required for the business with the payroll tax debt isn’t that much more involved than the smaller personal tax liability, assuming you have proper financial records for the business.

Instead of getting a fee quote based mainly on how much you owe and what a salesperson gets a “vibe” that you can afford to pay, make sure you get a firm fee quote … Continue reading

Common Sense Advice Regarding Offer In Compromise Scams

By now, everybody with a tax bill has heard the “pennies on the dollar” promises on radio and TV. Before handing over thousands of dollars to some Slick Rick salesman over the phone, here are some things you need to know about the Offer in Compromise program.

First and foremost: You probably don’t qualify. What’s that? How can I say that without even knowing you or your situation? Because the IRS statistics show that most people that apply don’t qualify, that’s why. In 2018, the most recent year for which data is available, the IRS outright rejected 59% of all Offer in Compromise applications that were submitted.

Secondly, the Attorneys General of several states, the Federal Trade Commission, and multiple class action lawsuits have been won over the common sales practice of promising tax relief, and not being able to deliver. More often than not, clients in those situations are sold an Offer in Compromise program for many thousands of dollars, and are then converted to an Installment Agreement (monthly payment plan to the IRS) with no refund of the price difference. This has been going on for years, and and many tax debt resolution companies have been sued for this and other egregious sales practices that are designed to do nothing but part you from your money.

There are probably tens of thousands of other OIC settlements sold by these companies every year that are never actually filed, so they don’t even go into that number that the IRS tracks.

If somebody is trying to tell you that you qualify for an Offer in Compromise without doing a thorough analysis of your financial situation, RUN! They will often say that you can settle your debt for some fraction of what you owe. That fraction is a totally made up number! The formula the IRS uses to determine your required Offer in Compromise amount has absolutely nothing to do with how much you owe — it’s entirely based on what you own and what you earn.

To determine whether you even qualify for an Offer in Compromise, you need to examine the value of your assets, including your retirement accounts, cash, equity in your home, your vehicles, the value of business equipment, etc. If all that stuff is worth more than what you owe the IRS, then you are most likely ineligible for an Offer in Compromise.

Also, take a look at … Continue reading