Do I Qualify for an Offer in Compromise Tax Relief Settlement?

This is a difficult question to answer without knowing the facts of your case. The best way to find out is to

call us and complete a consultation. Through this, we can determine the likelihood of success.

If we do not think the IRS will accept your Offer in Compromise, we provide alternative options that may

produce savings on your tax debt.

We always complete this preliminary review of your finances and a detailed review of your IRS account

before you ever decide to hire us or we agree to take your case.

There is no up-front cost or obligation for taking advantage of this service and it really does ensure a higher likelihood of success if we are able to fully review your candidacy before ever taking over a case.

In our consultation, we will also provide you with any and all Collection Statute Expiration Dates on your IRS account. It is important to know this information as these dates are necessary when not only computing your candidacy for an OIC but will also indicate which option is best for you and whether an OIC will truly generate the optimal outcome.

We strongly believe our financial review and in- depth tax debt analysis is what separates us from other IRS tax relief firms. It keeps both our Offer success rates and customer satisfaction levels high— if we don't think you can settle, we will tell you up-front and then layout the option(s) that will truly promote the best outcome in resolving your IRS Debt.

We always give honest answers, even if we're not telling you what you want to hear. To learn more about your options, give us a call, email us, or complete the consultation request form on the right and Rick will contact you within one business day.

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Can a Business file an Offer in Compromise?

The IRS has an Offer in Compromise program for businesses called the In-Business Offer in Compromise.

It should be noted this is notorious for being extremely difficult to negotiate, and the rates of success without a tax professional are incredibly low.

The main difference between the In-Business Offer and the Individual Offer, is that the IRS requires a business to, at a minimum, pay the Trust Fund portion of taxes in any settlement (the amount that was withheld from employee paychecks in the case of back payroll taxes).

Most company tax debts are payroll tax debts, so this is usually a problem. It means that your minimum settlement may be as much as 50% of your debt. Whereas, individuals can often settle for less than 1% of what they owe.

Because many businesses cannot afford to pay the Trust Fund portion of the debt, it is common for an Offer in Compromise not to be a viable solution.

Additionally, the IRS will often require a Business Valuation to determine the value of the company and this is not only an expensive process but it is also a very tricky figure to accurately compute.

Typically, a small payment plan or a corporate restructuring is a more feasible solution. While an Offer in Compromise for a business is not impossible, there are usually easier ways to accomplish similar results while saving you a lot of time and money along the way.

Call us for a free consultation. We will review what options are best for your unique situation and at absolutely no cost to you.

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How long does an Offer in Compromise take?

It can take from six to twelve months to successfully negotiate an IRS Offer in Compromise. Your assistance in collecting and providing necessary documentation is required in order to get an acceptance as quickly as possible.

If your Offer is initially rejected by the IRS, you may exercise appeal rights to have the IRS take a second look. If you choose to do so, the complete process can take over two years before the IRS will make a final determination.

Patience and accuracy are key if you want to be successful.

The good news is— for the entire time an Offer is pending, you are protected from IRS enforcement action. This means they cannot levy or garnish your wages while an Offer is pending.

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How is an Offer in Compromise Calculated?

Your tax settlement is calculated using a complex formula taking into account the equity in your assets and projected future income.

We have prepared a free Offer in Compromise eBook and infographic that you can download which provides more guidance.

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How long will I have to pay my Offer in Compromise Settlement?

The length of time given to a taxpayer to pay off their settlement depends on which settlement option the taxpayer chooses. There are generally two options for repaying an Offer in Compromise tax settlement.

  • Cash: Tax debt settlement amount must be paid within 5 months of acceptance.

  • Periodic Payment: Tax debt settlement must be paid in equal monthly payments and for as long as 24 months.

 

If you choose the Cash option, you must submit 20% of your proposed settlement at the time you send in your Offer to the IRS.

If you choose the Periodic Payment option, you must make your proposed monthly payments for the entire time that the Offer is under consideration by the IRS. If they reject your Offer, they keep the monthly payments you've sent in and apply them to your balance(s).

In most cases, we try to offer a settlement low enough that you can afford the cash option. This ensures that you can send in the 20% down payment, then wait to hear from the IRS (rather than being obligated to monthly payments for the entire time you are waiting for them and risk missing a payment).

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Will Interest and Penalties accrue if I choose the Periodic Payment option?

No. Whatever settlement the IRS agrees upon is the final number -- your settlement does not accrue interest or any future penalties.

However, if you default on your Offer in Compromise, the IRS will not only rescind the Offer Acceptance, but will also assess you for all of the penalties and interest that would have accrued had a settlement not been accepted.

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Will an IRS Offer in Compromise appear on my Credit Report?

No. An Offer has none of the negative ramifications of filing bankruptcy.

We should note that if the IRS has already filed a Notice of Federal Tax Lien, this will definitely damage your credit score. However, once your Offer in Compromise negotiation is complete and the tax settlement is paid in full, the IRS tax lien will be released and listed as paid-in-full with the credit bureaus.

The tax lien itself remains on your credit report for 7 years after the date the lien was released, but it will appear as "Satisfied", so creditors will know that you no longer owe this IRS debt.

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Offer in Compromise vs. Bankruptcy

There are many advantages of the Offer in Compromise over Bankruptcy.

Many IRS tax liabilities are not dischargeable in bankruptcy, meaning that the only option is to set up a payment plan through the courts.

A bankruptcy will stop IRS enforcement including garnishments and levies, but so will an Offer in Compromise; therefore, stopping a garnishment or levy should never be the sole decision-point between choosing which option to pursue.

We generally view an Offer as the preferable option of the two. As an administrative procedure, you never have to go to court or before a Trustee. We can handle the entire process through written filings and telephone conferences directly with the IRS.

Occasionally, there are circumstances where bankruptcy will get you better results. For example, in an Offer in Compromise, the IRS may demand that you liquidate and pay from your retirement account.

Part of our no-nonsense consultation is to consider your unique circumstances and we evaluate this exact question. If we think bankruptcy is going to be a better option, we will tell you.

It costs us business from time-to-time, but if it's what is best for you then we will let you know!

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What is an Effective Tax Administration Offer in Compromise?

An Effective Tax Administration Offer in Compromise, also referred to as an Offer in Compromise with Special Circumstances, is a process in which you convince the IRS to accept a settlement even though you can pay your debt in full.

These are extremely rare, but in the right situation they must be pursued (and we have successfully done so).

In a normal Offer in Compromise, you are attempting to convince the IRS that the amount you are offering is the most that they can ever hope to collect.

In an Effective Tax Administration Offer in Compromise, you are trying to convince the IRS that you owe the debt, you could fully pay the debt, but because of your unique situation or circumstances it would be unfair to make you do so.

The reasons for pursuing this are so unique from case-to-case that it would take an entire book to explain. Generally, we make arguments of equity or fairness: even though our client can pay back the debt, it would unfair to force them to do so.

A great example of this would be someone who retired and has enough money in a retirement account to pay off their IRS debt but we are able to demonstrate this individual is reliant upon these funds to survive on a month-to-month basis.

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What is a Doubt as to Liability Offer in Compromise?

A Doubt as to Liability Offer in Compromise is utilized when the Taxpayer does not believe they actually owe the tax debt.

In the standard Offer in Compromise, we argue that you cannot pay the tax debt in full. In a Doubt as to Liability Offer in Compromise, we argue that you do not owe the back tax liability to begin with.

There are two types of Doubt as to Liability Offers in Compromise:

  • Examination issue Doubt as to Liability Offer in Compromise: these arise when a taxpayer believes that a mistake was made in through an examination or audit of their tax return that resulted in a tax liability.

    These are rare, because the IRS has other avenues available to contest these assessments through an audit reconsideration. This is something we can evaluate and determine which approach is best suited to your particular situation.

 

  • Legal or factual issue Doubt as to Liability Offer in Compromise: The most common Offer in Compromise submitted under these grounds will be in response to a Trust Fund Recovery Penalty Assessment. Here, the taxpayer’s Offer in Compromise must lay out both legal and factual grounds as to why their assessment of the Trust Fund Recovery Penalty was improper.

    This is a useful tool when clients have missed their Appeal window(s) to protest tax assessments and no remaining options exist to fight those assessments. Collection on Trust Fund Recovery Penalties are a priority of the IRS and we handle these types of cases on a very frequent basis due to the aggression of the IRS and the real importance in making sure this type of tax balance is addressed properly. If you have been assessed, or are in the process of being assessed, with a Trust Fund Recovery Penalty, it is important that you reach out to us to discuss.

Your Next Steps

Give us a call at (866) 573-3755 today to talk to someone safe about your situation.

We can have a quick chat on the phone so I can answer your questions and see if there is any way we can help you.

If you'd rather, click here to request a free consultation.

There is no risk and no obligation. We can really simplify this entire process for you!

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Colonial Tax Consultants, LLC

425 S Cherry St, Suite 430

Denver, Colorado 80246
Phone: (303) 573-3755