An Offers in Compromise is a settlement of your tax debt when the IRS is willing to take less money than what is owed by the tax payer and consider their debt fully paid. It can be incredibly helpful in assisting those with tax problems. An Offer in Compromise is considered one of the most desirable solutions to take, but is also the most difficult to attain. Our San Diego tax attorneys at Milikowsky Tax Law help explain what Offers in Compromise can do for you and how you can attain one if you need assistance.
About Offers in Compromise and How It Helps
It’s pretty obvious how owing less money than what you originally owed would be beneficial to you. But how is the offer amount determined and how do you gert an OIC? The IRS first determines a taxpayer’s ability to pay within the 10 years the IRS has to collect taxes. IRS will thoroughly examin an individual or business’ income statement, balance sheet of assets and liabilities, as well as the earning potential in future years.
This process determines what you can afford given:
- Liquidations of property
- Income and savings accounts
- Available revenue after paying living expenses
- Doubt as to collectability
- Effective tax administration
Various legal issues also come into play with an OIC. For instance, IRS will determine lien priority rights between a individual or a business’ creditors and IRS. So who has priority? It depends on the type of debt.
Based on the legal analysis and financial numbers, IRS can then determine whether to grant an an Offer in Compromise. For businesses, the analysis will require valuation of the business with an estimation of future revenue.
Negotiations for an OIC require a thorough understanding of the financial and legal issues involved and negotiating these points with IRS. The process of preparing an Offer in Compromise can be relatively quick. Preparation for the meeting with IRS can take time to ensure the legal issues and financial analysis is properly conveyed to IRS. Negotiations can take several months. A skilled San Diego tax attorney may have options to shorten the timeframe an OIC is reviewed.
While your offer is pending you must make payments toward your offer or your OIC may be rejected. An OIC should be submitted with a deposit of 20% of the amount offered. Other options exist to reduce the initial deposit.
Why a Tax Attorney Can Help You
Attaining Offers in Compromise is even more difficult without the assistance of a tax attorney to guide you and to advcoate on your behalf. And IRS tax lawyer can handle phone calls and letters from the IRS quickly and professionally, without the possibility of errors messing up the process. Along with legal counsel through the process, a tax attorney can also provide future financial strategies for handling your tax debts and getting you to be debt-free from taxes.
Filing an Offer in Compromise with California State Tax Agencies.
An offer in compromise is also available with California tax agencies. There are differences in how an OIC is processed with the State of California and an OIC is not available to all taxpayers. For instance, California applies different standards to what expenses are accepted in determining a taxpayer’s ability to pay. Additionally, California has 20 years to collect taxes.
Our law firm has prepared hundreds of offers and has the expertise to guide both individuals and businesses to resolve their taxes.
Contact Milikowsky Tax Law today for a San Diego tax lawyer that can help you attain an Offers in Compromise!