On: August 15, 2022

IRS Experienced Tax Experts on Offers in Compromise Pasadena

Receiving an IRS tax collection letter when you cannot pay the claimed outstanding Federal tax liability can be a frustrating, stressful situation.

However, all is not lost.  There are various actions to take to attempt to settle the outstanding Federal tax liability in a favorable manner.

One such settlement action is an IRS offer in compromise agreement.

If you are in Pasadena and pursuing an IRS offer in compromise agreement, you need the services of an IRS experienced tax expert in Pasadena who understands how to achieve the best possible offer in compromise settlement for you.

IRS Offers in Compromise – General

An IRS offer in compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed.

To qualify for an IRS offer in compromise, the taxpayer must have filed all tax returns, made all required estimated tax payments for the current year, and made all required Federal tax deposits for the current quarter if the taxpayer is a business owner with employees.

In addition, taxpayers who can fully pay their Federal tax liability through a payment plan (including an installment agreement) generally will not qualify for an IRS offer in compromise in most cases.

Why the IRS May Accept an Offer in Compromise

The IRS may accept an offer in compromise based on one of the following three reasons:

1. There is doubt as to liability. An offer in compromise meets this criterion only when there is a genuine dispute as to the existence or amount of the correct tax debt under the law.
2. There is doubt as to collectibility (there is doubt that the amount owed is fully collectible). Doubt as to collectibility exists in any case where the taxpayer’s assets and income are less than the full amount of the tax liability.
3. There is effective tax administration. An offer in compromise may be accepted based on effective tax administration when there is no doubt that the tax is legally owed and that the full amount owed can be collected, but requiring payment in full would either create an economic hardship or would be unfair and inequitable because of exceptional circumstances.

Generally, the IRS will not accept an offer in compromise unless the amount offered by a taxpayer is equal to or greater than the “reasonable collection potential” (“RCP”).  The RCP is how the IRS measures the taxpayer’s ability to pay.  The RCP includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property.  In addition to property, thy RCP also includes anticipated future income less certain amounts allowed for basic living expenses.

The best way to view an IRS offer in compromise from the perspective of the IRS is that it is better to recover something in settlement than to spend resources and time pursuing a taxpayer and ultimately recover nothing.

IRS Offers in Compromise – The Process

When submitting an IRS offer in compromise based on doubt as to collectibility or effective tax administration, taxpayers use Form 656, Offer in Compromise, and also Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (OIC), Collection Statement for Businesses.

When submitting an IRS offer in compromise based on doubt as to liability, taxpayers use Form 656-L, Offer in Compromise (Doubt as to Liability), and also the above-described Form 433-A (OIC) and/or Form 433-B (OIC).

An IRS offer in compromise requires a $205 application fee (except if the offer in compromise is based on doubt as to liability and for certain low-income individuals).

There are two payment options for an IRS offer in compromise – a “lump sum cash offer” and a “periodic payment offer”:

• A lump sum cash offer is an offer payable in five or fewer installments within five or fewer months after the offer is accepted. If a taxpayer submits a lump sum cash offer, the taxpayer must include with Form 656 a generally nonrefundable payment equal to 20 percent of the offer amount (in addition to any application fee).
• A periodic payment offer is an offer payable in six or more monthly installments and within 24 months after the offer is accepted. If a taxpayer submits a periodic payment offer, the taxpayer must include with Form 656 the first proposed installment payment (in addition to any application fee).  While the IRS is evaluating the periodic payment offer, the taxpayer must continue to make the installment payments provided for under the terms of the offer.  The installment payments under a periodic payment offer are generally nonrefundable.

If the IRS rejects the offer in compromise, the taxpayer will be notified by letter.  The taxpayer may appeal the decision to the IRS Independent Office of Appeals.  The appeal must be made within 30 days from the date of the letter.

While an IRS offer in compromise is pending, for 30 days immediately following the rejection of an IRS offer in compromise, and during the period that an appeal of a rejected IRS offer in compromise is being considered by the IRS Independent Office of Appeals, the statutory time within which the IRS may engage in collection activities is suspended.

Best Practice for IRS Offers in Compromise – Retain an IRS Experienced Tax Expert

IRS offers in compromise raise complex issues.  If you have never filed an IRS offer in compromise, it is unlikely that you will do your first one properly on your own.

Instead, as a best practice for any IRS offer in compromise, it is critical that you retain an IRS experienced tax expert who has years of experience in pursuing IRS offers in compromise.  Such an IRS experienced tax expert can help you with each of the following issues:

• Whether you should file an IRS offer in compromise or instead take a different approach to attempt to settle your outstanding Federal tax liability;
• Whether the IRS offer in compromise that you file should best be based on doubt as to liability, doubt as to collectibility, or effective tax administration;
• Filing any outstanding tax returns or otherwise assisting with completion of any background conditions that are necessary in connection with the IRS offer in compromise;
• Evaluating whether the IRS offer in compromise should be a lump sum cash offer or a periodic payment offer;
• Determining the specific terms to offer to the IRS in the IRS offer in compromise;
• Preparing the above-described Form 656, Form 656-L, Form 433-A (OIC), and/or Form 433-B (OIC) (as the case may be) in the best manner possible;
• Negotiating with the IRS over any IRS offer in compromise; and
• Handling the appeal of any rejected IRS offer in compromise.

Leading Tax Group – The Best IRS Experienced Tax Experts on Offers in Compromise in Pasadena

If you are in Pasadena and want the IRS to approve an offer in compromise agreement, you need the assistance of the IRS experienced tax experts at Leading Tax Group (their experienced team consists of a former IRS tax attorney, an experienced payroll tax and sales tax attorney, a retired IRS auditor (of 40+ years), and their own in-house accounting team!).

Leading Tax Group has handled and favorably resolved a vast number of IRS offer in compromise cases for its clients.  Leading Tax Group has the expertise to know what offer in compromise terms will likely be accepted, and what offer in compromise terms will likely be rejected, by the IRS.

Based on its extensive knowledge and experience concerning IRS offers in compromise, Leading Tax Group is the best IRS experienced tax experts (their experienced team consists of a former IRS tax attorney, an experienced payroll tax and sales tax attorney, a retired IRS auditor (of 40+ years), and their own in-house accounting team!) in Pasadena to enable you to use an IRS offer in compromise agreement to settle your outstanding Federal tax liability in a successful manner.

Leading Tax Group has a conveniently accessible office in Pasadena at 225 S Lake Avenue, 3rd Floor.

If you want to use an IRS offer in compromise agreement to address your outstanding Federal tax liability and move on with your life, you need the aggressive IRS experienced tax experts from Leading Tax Group (their experienced team consists of a former IRS tax attorney, an experienced payroll tax and sales tax attorney, a retired IRS auditor (of 40+ years), and their own in-house accounting team!).

For the best IRS experienced tax experts (their experienced team consists of a former IRS tax attorney, an experienced payroll tax and sales tax attorney, a retired IRS auditor (of 40+ years), and their own in-house accounting team!) in Pasadena, contact Leading Tax Group now at (800) 900-4250 and schedule your free consultation today!