IRS DEBT

OFFER IN COMPROMISE PROGRAM

INSTALLMENT AGREEMENTS

If you owe the IRS money and you do not have the ability to pay the outstanding obligation then you have two main programs available to you.

Installment Agreements

You have the ability to enter into an installment agreement if your in full compliance.  What does full compliance mean?  Well, mainly -- your current on all your tax filings.  If your not then you DO NOT qualify for an installment agreement--get the returns filed ASAP.  See non-filer section and the harmfull effects of not filing

Two ways to enter into an installment agreement.

1) If your total assessed balance with the IRS is under $50,000 including any penalties or interest then you qualify for a streamlined installment agreement.  Just simply pick up the phone and call the IRS and request an installment agreement.  You can pay the balance over a 72 month period--so simply divide the balance by 68 (to ensure its under) and request that amount to pay monthly.  Yes, its that easy. Can I do this myself?  Likely. 

2) If your total assessed balance is over $50,000 then you will have to furnish financial information and THEY will determine what THEY BELIEVE you can pay.  This is called a non-streamlined installment agreement

What will they base my ability to pay on?  The IRS uses the National and Local Standards for Necessary Living Expenses (The standards are derived from the Bureau of Labor Statistics (BLS) Consumer Expenditure Survey (CES)) when determining what your ability to pay is.

3) What if my current abilty to pay is not present at this time?  This happens when a job loss or something renders your current income (i.e., past or future income) less than the National and Local Standards for Necessary Living Expenses.  In that case, you can be  placed in presently non-collectible status.  Your in in full compliance --- but you just don't have the means to pay right now.  The IRS then is waiting for you to earn above the standards and they have 10 years from the date of filing (or assessment) to collect or its extinguished. 

This is where you need representation to ensure all your unique financial issues are consider when deriving the monthly payment amount.  Find an Attorney, CPA, or Enrolled Agent to help you undertake this.  We routinely are involved in this as a part of our tax practice.      

 

Offer in Compromise Program

This is, by far, the most fraudulently advertised program by the national storefronts claiming to be tax solution specialists.  See our section on BUYER BEWARE.  Remember your mother always told you "if it sounds too good to be true --it probably is" !! 

The IRS will accept the offer only if the offer is equal or exceeds the reasonable collection potential of the taxpayer.  

See the attached -- good article.  

Yes, the program exists and it does provide a solution for some Taxpayers but the program does have some significant drawbacks:

1) There is a ten (10) statute of limitations on tax collections.  In essence, the IRS has ten years to collect any tax due from the "date of assessment" (technical term here).  Before doing an OIC you should evaluate whether your better to let the statute run as the filing of an OIC tolls (from the time you file the OIC to the time it is closed -- that time does not count) against the ten year statute of limitations.  So the bottom line is by doing an OIC -- you extend the 10 ten year statute of limitations - for all the time involved in seeking an OIC.  Remember -- in 10 ten years -- it goes away automatically. 

Many times, your better to be deemed "uncollectible" (essentially they evaluated your financial information and your income is less than the National and Local Standards for Necessary Living Expenses--you don't presently have an ability to pay anything) or entering into an Installment Agreement.  It is critcial you evaluate this fully.

2) The program is not a right but is done in equity.  You can not say with certainty it will be approval on a solid matrix--its all over the place in acceptance and is fact senistive as to why the balance occured in the 1st place.  It should not be viewed as lipsuction from a tax perspective.  

3) Its expensive and time consuming.  The data submission and re-submission required is massive.  I have administered many bankrupcties with far less paperwork.  Its kind of like closing on 10 home mortgages at once and it takes a long time.  On average, from initial submission to rejection or approval twelve months and that is staying on top of the additional requests for informtion or re-freshes of information.

4) Your providing massive amounts of information to the Service that can and will be used against you in collections (if you end up there).  In addition, you run the risk of providing false information and committing a tax crime.   

5) You may have to provide a lump sum with the application and you lose that lump sum even if the Service rejects your offer.    

That being said the OIC Program offers one thing --- complete and final disposition of the tax liability once and for all.  That is a very nice attribute.  We just do not oversell the program in an unethical manner like many others do.

 

If you need assistance in any of these areas then we would be glad to discuss the matter in greater detail and with the benefit of your unique issues. 

 

To schedule a confidential consultation contact our office at:

(281) 598-0313 (Houston Metro)

(866) 512-1391 (Toll Free)

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