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IRS Offer-in-Compromise, Hype or Hope?
"Settle for Pennies on the Dollar! IRS debts settled for $20 Wipe out the Penalties with an Offer"-such is the language of Offer-in-Compromise promoters. What they fail to tell you is that one has to qualify for an Offer and few taxpayers will be able to meet the tough standards for an OIC. The Offer-in-Compromise (OIC) has been around for a long time, but it wasn't until 1992 that IRS started really using the program in good faith. After the Revenue Reform Act of 1998, IRS became even more liberal with the OIC. At one point almost half of all Offers were being accepted. Unfortunately, in 2002, the IRS started getting tough on Offers and now only about 25% of all Offers are accepted. The main reason for the decline was the centralization of Offers at two IRS locations instead of them being worked locally at the district offices. An Offer can be made for "Doubt as to Liability" or "Doubt as to Collectability." Submitting a proper OIC is more than just filling out an IRS Form 656. A good offer must have 3 recent months of supporting documentation attached with the Form 656 (if the OIC is for doubt as to collectability). Failure to fill out the Form 656 properly, failure to include all liabilities, or failure to provide the documentation required results in an Offer that is dead on arrival. Even if the forms are complete and the data provided; the Offer is now just "processable" and 6-9 months may go by before a decision is reached on the merits of the OIC. Unscrupulous Offer Promoters often don't qualify people for the Offer, they just sell them a bill of goods. Folks can pay thousands and not have a chance at an OIC to begin with! Don't do business with anybody that doesn't at least take a full financial statement from you. If the matter is Doubt as to Liability, no financial is required, but there needs to be a solid basis for the claim in law and policy. The main items that often sink an Offer when someone does qualify based on income and expenses are assets such as IRAs, 401Ks and home equity. If you owe the IRS 25K but you have an IRA worth 50K and home equity of 50K, forget about an OIC. There would have to be a horrible circumstance in your life to get past the equity in assets. In very rare cases of health or old age, exceptions can be made. Just because you can't pay your bills on time doesn't make you an Offer candidate. You must not be able to full pay based on income and expenses plus the "quick sale" value of your assets. Only then is a Doubt at to Collectability Offer an option. If you qualify, you really can settle for "pennies on the dollar," but it might be 30-50% of your debt based on the math. To settle for $500 you would have to be broke with no assets at all and no prospects for near term improvement of your financial situation. See a CPA, Tax Attorney, or Enrolled Agent if you are considering an Offer. They can go over all of your options. You can learn more about Offers at these websites: www.irs.gov James Robert Coleman, E.A., A.T.A.
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IRS Offer-in-Compromise, Hype or Hope? "Settle for Pennies on the Dollar! IRS debts settled for $20 Wipe out the Penalties with an Offer"-such is the language of Offer-in-Compromise promoters. What they fail to tell you is that one has to qualify for an Offer and few taxpayers will be able to meet the tough standards for an OIC. Get Uncle Sam To Pay $36,000 For Your Childs Education! Let's assume that you would like to begin saving for your children's education fund. At the end of each year, for the next 8 years, you will contribute $2,000 into a Coverdell Education Savings Account (Education IRA), using your after-tax dollars. Tax Secrets - How Drew Miles Helped Me How about a Tax Tip?As we all know Taxes are a necessary evil. While none of us like paying taxes there are many strategists out there that can make your life a lot easier when that dreaded day arrives. 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How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share How Home-Based Businesses Can Avoid Giving Uncle Sam More than His Share By Darren Oliver With the rush to file your taxes by April 15th, you probably did not consider the possibility that you overpaid. According to the General Accounting Office, in 1998 alone, there was $311 million paid unnecessarily to the IRS. Correspondence From The IRS - Yikes! It's a moment every person dreads. You pick up the mail and there is an envelope from the IRS. IRS Statute of Limitations: Do Taxes Ever Expire? Many Americans believe that an IRS debt is a debt for life and that the tax collector can hound them to the grave. Thankfully, that is not the case and there are statutory time limits on the ability of the IRS to examine and collect taxes. How to Cut Duty Cost and Increase Profit as an Importer Import duties continue to be significant elements in the cost of international trade. Yet many companies and businesses still pay more duties than the law requires - which impacts adversely on landed cost and ultimately on business profitability. Requirements To Produce Tax Information (Whats Up With That?) "What we've got here is a failure to communicate." --Strother Martin in Cool Hand Luke Statutory Law Governments pass laws, it's what they do. Marriage or Divorce - Check Your Social Security Number Newlyweds and the recently divorced should make sure that names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill or reduce the size of any refund. Tax Jokes and Quotes Do you realize that some tax forms ask you to check a box if you are BLIND?Quote: "Two years ago it was impossible to get through on the phone to the IRS. Now it's just hard to get through. Tips and Simple Guidelines on How to Calculate Payroll Taxes Managing a business small, medium or big requires you to pay your taxes, as well as your employees taxes. Managing a payroll can be an arduous and taxing job, no pun intended. Save Money on Taxes - Double Your Income Now With Tax Saving Tips on Deductions Adding Your First Additional Stream of IncomeMost new wealth builders currently have a full-time job. After realizing that means "Just ----Over Broke" they commit to quitting their job and starting their own business. The Internet Tax Man Cometh Q: I was contacted by the city tax collector to say that my business is scheduled to be audited to see if I owe sales tax on items purchased on the Internet. Can they really make me pay sales tax on internet purchase? I thought you could buy things online tax free? -- Charlie B. Six Urban Myths About Taxation Six Urban Myths - Taxation"I am proud to be paying taxes? I could be just as proud for half the money." - Arthur Godfrey Temporary Taxation in Canada In 1917, the Income War Tax Act (7-8 George V, Chap. The Implications of Income Tax Charge on Estate Planning OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon Brown announced proposals to levy an Income Tax charge from 6th April 2005 in those circumstances where the transferor of an asset retains and interest or continues to benefit from that asset. In the instance of real property, the 'benefit' envisaged is the transferor continuing to reside in the property he/she has allegedly given away. What is a Federal Tax Lien? A Federal Tax Lien (FTL) is a legal instrument that secures the claim of the United States in the right, title, and interest of a debtor taxpayer's assets. It is a public document and is recorded at the County Clerk's office or the Secretary of State, depending on local law. How To Get An Extension To File Your Business Tax Returns Yes, the tax season is upon with the first filing date for some businesses being March 15, 2005. If you can't imagine getting your tax returns together by that date, you need not worry.
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