The Offer in Compromise( OIC) is known as a structured Internal Revenue Service program which offers the American tax payer the best chance in clearing off his tax debts entirely. it is true that many tax relief companies for instance Taxmaster, American Tax Relief and RoniDeutch went out of their business as a result of their failure in delivering results and several new ones spring up on the net regularly,but each year many taxpayers get benefited from Offer In Compromise program which helps to remove their tax debts totally.
The one thing everybody should know that IRS employees aren't the dumb people and they never going to take your low offer just because you requested or you approach them with a tax attorney at law. The simple truth is they only accept or consider an Offer in Compromise if it's inside their guidelines and limit. This is where a tax lawyer can assist you to get to an agreement with the IRS. But do you know that there are situations in taxpayer's life in which it’s advisable to not apply for an Offer in Compromise? Right here is the list of four major situations.
1. Offer in Compromise as well as the tax laws compliance
You should understand that, tax payer should adhere to all federal tax rule and paying requirements for a period of five years following acceptance of their OIC, or until it is paid completely, whichever is longer. Failure to pay the OIC on time or to stay in compliance during the 5- year time period, can result in the offer being reported in default .. We recommend alternative actions for our clients to settle outstanding tax dues when they are not to keep up with the monthly payment.
2. If you have old taxes and you were thinking about filing bankruptcy
It's a common misunderstanding that you simply can't eliminate tax dues in Chapter Seven bankruptcy. This isn't true. Really it could be completely wiped out. So you don’t have to worry about your unpaid taxes since federal income or state income tax can be discharged in Chapter 7 Bankruptcy. You might have over heard in radio commercials where some tax relief firms states that bankruptcy is really a bad solution. The simple truth is, it's poor only for these businesses given that they cannot get much money when going for bankruptcy. We work to provide the best remedy for your tax problems even when the ideal solution for you doesn't provide any monetary fee for us. Our proper guidance helps the citizen to come out of their tax issues and this reputation makes us busy all through the year.
3. For those who have filed previous Offers in Compromises without success
Internal Revenue Service do not want to see numerous Offer in Compromise from a tax payer. It'll only result in a rejection. Just remember when your offer isn't competitive, it'll get rejected. The only method leading to approval of your offer is to approach the IRS staff with a genuine story that persuades them to take your proposal and by making use of little-known tax exceptions. In the event you neglect this, prepare yourself to see denial of one's offer.
The Internal Revenue Service just has 10 years to recover the tax owed, after that they no more can claim the debt and they write it off. There are some things that stop the time from ticking. One event is the filing an OIC. This is called as tolling the statute of limitations. Assume your tax return was filed for the fiscal year 2001 in timely manner. Your tax assessment took place on the next year( 15th Apr, 2002) and had some tax obligations. While you did nothing to halt the clock, the IRS cannot collect your tax debts on or right after Apr 16, 2012. Of Course, by now there is no amount that must be paid to settle with the IRS.
Take into account that the filing of an Offer in Compromise will stay the 10- year statute of limitations on collection for a period of the offer in addition to one full year. There was one case that we represented in which a citizen proceeded to go for offer in compromise and filed six times for the year 2002 tax dues. So this stretches the ten year time and now Internal Revenue Service can claim the debts upto the calendar year 2018. If this tax payer did not make the blunder of filing an OIC, his issue will be already solved now.
4. Making use on the Statute of Limitations
Now think about looking this case in a alternate point of view- Let's assume that lawyer filed 1040 by deadline for 2002 year taxes. And he never ever gone for any options that can toll the time from running. As of now, the whole tax arrears that added up with penalties is$ 250,000. Can he go with offer in compromise?
No, never. Look, the internal revenue service has under7 months to recover on his debts. Maybe this lawyer would be better off by getting the IRS to accept a partial payment installment agreement for$ 1000 a month for the next7 months instead of an offer in Compromise. Why this method? Mainly Because as soon as Apr 16, 2013 comes, that’s it. It Is over. For his$ 250,000 taxes owed, he paid back only$ 7000. The negative effects to this method is that any tax lien filed against him cannot be released or removed. It will appear in credit profile as a outstanding debts. But an offer in compromise which have accepted by Internal Revenue Service and this clear off the debts is going to be viewed as full repayment. Carrying this out usually will have a positive impact on credit report.