Due to COVID-19, we are offering "touchless" or "contactless" legal services to those seeking bankruptcy relief. The bankruptcy courts are still open and operating remotely during this time and are accepting bankruptcy filings. My office is currently offering consultations by Google Meet video meetings or telephone and everything else can be done by email, scanning, fax or photos. For the time being, bankruptcy hearings are occurring by teleconference or video services. We are open and here to help people in these trying times. Please don’t hesitate to call us if you wish to discuss bankruptcy options.

Due to COVID-19, we are offering "touchless" or "contactless" legal services to those seeking bankruptcy relief. The bankruptcy courts are still open and operating remotely during this time. Please don’t hesitate to call us if you wish to discuss bankruptcy options.

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Tax Settlement Attorney in White Plains

How an Offer in Compromise Can Help Your Tax Settlement

The Internal Revenue Service estimates that Americans owe approximately $130 billion in back taxes. Owing the IRS taxes and interest can result in a charge of .5-25% of the total amount you owe for each month that taxes remain unpaid until the full 25% is reached.

Individuals may be unable to pay their taxes for a number of reasons. Regardless of your reason for owing taxes, you have options. An offer in compromise is a form of debt relief for many qualifying taxpayers.

An excellent way to build a strategy for tax relief is to consult a licensed attorney. I have helped White Plains clients find favorable outcomes for their tax situations through a variety of options. At Natasha Meruelo, Attorney at Law, my team is dedicated to providing personalized strategies for our clients’ unique needs.

Call Natasha Meruelo, Attorney at Law at (914) 752-5098.

Offer in Compromise

If you are behind on your taxes, don't panic. An offer in compromise can help you settle your tax debt for less than what you owe. However, taxpayers must meet specific qualifications. There are three main situations where the IRS will consider granting an offer in compromise.

The situations are as follows:

  • Doubt as to liability: This refers to a situation where there is a dispute about the amount you owe or whether you owe anything at all.
  • Doubt as to collectability: This is the most common situation. Doubt as to collectability exists if you can demonstrate that your assets and income, when combined, are insufficient to pay the full amount of tax liability within the remaining time available to the IRS to collect.
  • Promote effective tax administration: This is rarely used but it is considered when entering into the compromise would promote effective tax administration after the IRS has determined that although collection in full could be achieved, collection of the full liability would cause the taxpayer economic hardship as defined by the Internal Revenue Code.

If you fall into any of the above categories, the IRS may consider you eligible for an offer in compromise and my office can answer any questions you have about qualifying under IRS guidelines for filing a request for an offer in compromise.

Once you have confirmed that you do in fact qualify, we can assist you with filing the appropriate paperwork with this IRS. You will need to provide detailed information related to your finances, assets and expenses. We understand this can be overwhelming for those who are in desperate need of relief from tax debt and are here to guide you through each step of the process.

As part of the offer in compromise, you must propose the amount you are willing to pay the IRS as a settlement for your taxes. It is important to put together an offer that has a probability of success as there is presently a non-refundable application fee of $205 and your first payment (made with your application) towards your offer in compromise is also non-refundable. A minimum 20% of the offer in compromise amount must be submitted with your application, on a non-refundable basis, but it may be designated to a particular tax debt if the IRS does not accept your offer.

So, what does the IRS consider an acceptable offer? The answer is it depends on the available equity in your assets plus what the IRS views as your net monthly income x 12 (if the taxpayer is making a lump sum offer) or 24 (if the taxpayer is making a periodic payment offer).

Assets can be property, vehicles, or even your bank account. Your assets plus your anticipated future income minus living expenses equal what the IRS calls "reasonable collection potential." At this point, you may be wondering why the IRS would require this information.

Basically, what the IRS is looking for from an offer in compromise application is proof of your financial circumstances in exchange for considering to accept less than you owe.

They want the birds-eye view of your situation to determine whether or not to accept your offer in compromise. Once they can see the scope of the issue, they can evaluate their ability to collect what you owe and make their determination.

Making Your Offer

You have two options for a proposed offer in compromise.

  • Option 1: A lump sum payment plan requires the taxpayer to offer up at least 20% of their offer upfront. Once you pay the initial amount and your offer is accepted, the rest can be paid over the five months following your offer's acceptance.
  • Option 2: Periodic payment plans. When you make your offer, you include your first payment and pay the rest over a period of 6-24 months. Under this option, you will have to make payments while the IRS is considering your offer. If you do not do so, your offer will be returned and not considered by the IRS. The only exception to this rule is if you qualify for a low-income exception, in which case no initial payment is required.

Any fees required as part of the application process are non-refundable, but the IRS applies them to your tax liability amount. Overall, this process can take time, and the IRS may deny your offer. If this is the case, the IRS allows applicants 30 days to file an appeal.

There are some other requirements for who can make an offer in compromise. These include but are not limited to:

(1) The taxpayer cannot be in bankruptcy.

(2) The taxpayer must have filed all tax returns.

(3) Any refund for year of acceptance will be kept and not applied to amount to be offered.

(4) The statute of limitations on collections and audit are extended.

(5) The IRS may file a federal tax lien during investigation, and any federal tax lien will not be released upon satisfaction of all financial terms of the OIC. (A “Withdrawal” would have to be requested at that time).

Start Building Your Case Today

An offer in compromise can be a fresh start for many taxpayers drowning in back taxes. The process is complicated but possible if you have quality legal help on your side.

This is where my firm comes in. I have helped White Plains clients navigate the complexities of addressing their tax debts. I can help you understand if you qualify for an offer in compromise and help guide you and prepare your proposal to the IRS.

If you are struggling with back taxes and wonder if an offer in compromise is right for you, contact Natasha Meruelo, Attorney at Law. Don't wait!

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