Do you owe money to the Internal Revenue Service? There are ways to negotiate an agreement on how much you’ll have to pay. Tadross Law will assist you with an IRS settlement in Philadelphia and Lansdale, Pennsylvania.
An offer in compromise is an agreement between you and the IRS to resolve your back taxes. The IRS can settle your federal tax liabilities by accepting less than full payment under certain circumstances, including:
The minimum payment amount is typically equal to the taxpayer’s reasonable collection potential, or RCP. The RCP includes your real and personal assets plus future income. The RCP looks at your asset’s quick sale value minus what you owe to a secured creditor.
Call Tadross Law today for a free estimate on IRS settlement in Philadelphia and Lansdale, PA.
Whether the IRS is demanding full payment of back taxes up-front or a payment plan that is substantially higher than what you can afford to pay, TadrossLaw can negotiate an offer in compromise settlement on your behalf for a fraction of what is owed or to set up an arrangement for the lowest possible monthly payment with various options for making those payments, if you qualify.
An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service that resolves the taxpayer's back tax liability. The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances.
The IRS may legally compromise for one of the following reasons:
If you are unable to pay off back taxes in full, you may qualify for tax relief by negotiating an IRS Payment Plan, more commonly known as an Installment Agreement (IA). An Installment Agreement allows a taxpayer to pay off tax debt with a series of regular monthly payments, usually within a statutory timeframe. Once an Installment Agreement is established, the IRS will cease all collection actions, including garnishment of wages. The IRS may also file a Notice of Federal Tax Lien until the final payment is made. If the amount the taxpayer can afford to pay monthly does not satisfy the debt owed (including interest and penalties), another option, such as a Partial Pay Installment Agreement or an Offer in Compromise, may be a better choice. While an Installment Agreement is a manageable tax relief option, be aware that all payments must be timely. Late payments can terminate the agreement, in which case the IRS may file a Notice of Federal Tax Lien and/or Levy, which will adversely affect a taxpayer's credit rating.
If you are married, it is very likely that you will file a joint tax return to minimize your tax liability. However, by filing a joint return, you are agreeing to be held jointly and severally liable for any and all taxes, penalties, and interest due on the joint return. This is true even if a divorce decree or other agreement states that your spouse or former spouse will be responsible for the tax liabilities. However, there are provisions that may protect one spouse from the mistakes of another. If you find that the IRS is attempting to collect on a tax that was incurred jointly with a spouse or former spouse, you may qualify for one or more of the following types of relief:
Innocent spouse relief — This type of relief is available if there is an understatement of tax or a deficiency on a tax return due to erroneous items of the spouse or former spouse of the requesting taxpayer. A deficiency would result when the IRS assesses an additional liability on unreported income or disallowed deductions. The taxpayer must demonstrate that when the tax return was signed, the taxpayer did not know and had no reason to know that the understatement of tax existed. The IRS will take into account all the surrounding facts and circumstances in order to determine whether it would be unfair to hold the requesting taxpayer liable for the understatement of tax.
Separation of liability — This relief is similarly available if there is an understatement of tax or a deficiency on a tax return. The liability for the understated tax may be separated such that the requesting taxpayer is granted relief from the liability. In order to qualify for this relief, the requesting taxpayer must be divorced, legally separated, or living apart from the spouse or former spouse at all time during the 12 months prior to the filing of the request. Separation of liability applies only to amounts owed that are not paid, and the IRS will not refund amounts that have already been paid.
Equitable relief — If the taxpayer does not qualify for separation of liability or innocent spouse relief, equitable relief may be requested in which case the IRS may determine that the taxpayer should not be held liable for any understatement or underpayment of tax after taking into account all of the facts and circumstances. This type of relief is primarily requested when the requested taxpayer believed that the spouse or former spouse would pay the tax due on a joint tax return but failed to do so.
As part of their investigation, the IRS is required to contact the spouse or former spouse of the taxpayer that is requesting relief from liability. The IRS must allow the spouse or former spouse to provide information that may assist in determining the extent of relief from liability. However, the IRS will not provide information to the spouse or former spouse that could infringe on the privacy of the requesting taxpayer. If that taxpayer is a victim of domestic abuse and fears that filing a request for relief will result in retaliation, the IRS can be alerted to the sensitivity of the requesting taxpayer’s situation. While this does not result in special consideration, evidence of abuse is one factor that the IRS considers for certain types of relief
To qualify for any of the above methods to resolve your back taxes, you need to file all delinquent tax returns with the IRS. Regardless of what you have heard, you have the right to file your original tax return, no matter how late it's filed. Until you have filed all legally required tax returns, the IRS will not entertain any type of tax settlement or payment plan to settle your back taxes.