Dealing with Tax debt
Offer in Compromise
Clients who owe the IRS thousands of dollars in unpaid taxes may be eligible for an Offer in Compromise. An Offer in Compromise is an agreement between you and the IRS in which you pay the IRS less than the amount you owe. This is the only way you can settle your IRS tax debt for less than you owe. You may be able to make one single affordable payment to resolve tens of thousands of dollars in tax debt. There are many instances, in fact, where the IRS will accept pennies on the dollar.
If and when your offer is accepted, the balance of your tax liabilities is forgiven. This provides a fresh start for taxpayers who are overwhelmed with tax debts that have grown beyond their ability to pay. After your offer is accepted you must remain compliant by filing all future returns and paying balances, otherwise the IRS can retroactively reject your offer and reapply all amounts owed.
It is important when submitting an Offer in Compromise that you submit an offer that the IRS is likely to accept. There is a lot of documentation that must be provided with the required forms. The attorneys at Rogers & Russell are experienced and have successfully wiped out over a million dollars in tax debt for clients. We know exactly what the IRS is looking for when evaluating Offers in Compromise. We often hear from other attorneys and accountants that Offers in Compromise are not successful. That is only true if the offer is submitted by someone who does not know the rules of the game. Call us today for a free evaluation of your situation, you may be able to settle your tax debt for pennies on the dollar.
The IRS will almost always allow a delinquent taxpayer to pay their past due balance(s) over time through an Installment Agreement. An Installment Agreement is a monthly payment plan between you and the IRS. The amount owed and the Service’s collection period will determine the monthly payment amount and the length of time allowed to pay the balance. Inexperienced attorneys and accountants often are unable to negotiate the best deal to repay delinquent tax balances. At Rogers & Russell, we know the IRS’s standards and policies. We can get you the best deal to repay your taxes over time.
One benefit an Installment Agreement is that it stops any adverse collection action by the IRS. If an Installment Agreement is agreed upon, then the IRS will not levy bank accounts or garnish wages so long as you continue making the monthly payment amount. Another benefit of the Installment Agreement is the fact that the collection statute on the debt continues to run. This means that if the statute expires while in an Installment Agreement, then the remaining balance is discharged. You might be able to enter into a partial pay Installment Agreement with the IRS if you can only make a limited payment and the IRS has little time to collect the full balance owed.
If you owe the IRS less than $25,000, the IRS will usually approve an Installment Agreement that spans over 72 months (6 years). If you owe more, however, you may be required to fill out certain forms and provide documentation substantiating your monthly income and expenses. We know how to develop a complete plan for you to get the best outcome when trying to enter in an Installment Agreement with the IRS.
Regardless of the Installment Agreement entered into, once all liabilities are paid in full, or after the collection statute expires, any recorded tax liens will be removed and will no longer negatively affect your credit. Call us at Rogers & Russell so we can answer your questions and develop a plan that will give you the best deal while paying your delinquent taxes.
Expiration Date on Taxes
The IRS has its own deadlines to meet. If the IRS does not collect the money you owe within 10 years of those balances being assessed, they can no longer attempt to collect those amounts and they must release all tax liens associated with those balances. The debt is essentially discharged. This is known as the Collection Statute Expiration Date (CSED). Unlike milk that’s gone bad, this expiration date is good for you. Ten years seems like a long time, and it seems like the IRS would never miss a due date like that, but they often do for various reasons.
Certain events, such as bankruptcy, submission of an offer in compromise and time out of the United States can pause the CSED date. Once you have resumed life after those events, the timer starts back up where it left off.
The calculation of the CSED can be complicated and often requires a complete review of your tax transcripts. It is important to know what balances you owe the IRS and what the expiration date is on each balance. We have tools to find out just how long the IRS has to pursue you for your past due taxes.