Mike Habib is not a tax attorney, but a Circular 230 licensed tax professional. What does this mean for you? Mike is a professionally licensed EA Enrolled Agent with the IRS who has over 20 years of working in the financial and tax field. There are several ways to handle your tax issues. The best way is to set an appointment and allow our office to review your situation to see what the law allows us to do. The absolute worst thing you can do is to ignore your tax issue.
The Internal Revenue Service today announced another expansion of its “Fresh Start” initiative by offering more flexible terms to its Offer in Compromise (OIC) program that will enable some of the most financially distressed taxpayers to clear up their tax problems and in many cases more quickly than in the past.
“This phase of Fresh Start will assist some taxpayers who have faced the most financial hardship in recent years,” said IRS Commissioner Doug Shulman. “It is part of our multiyear effort to help taxpayers who are struggling to make ends meet.”
Call us today at 1-877-78-TAXES [1-877-788-2937] for a brief consultation.
Unpaid back taxes can attract serious penalty from the IRS, and getting professional tax help is the best option to resolve this issue. Individual and business taxpayers in San Diego, CA metro area of greater San Diego, Carlsbad, San Marcos and National City with back taxes accumulate when you have not paid your federal or state taxes for a variety of reasons. You may not have been sure of your tax liability or could not afford to pay the tax or simply just did not get around to filing your tax return. Whatever the reason, the IRS is sure to catch up with you soon and enforce their aggressive tax collection techniques.
Businesses and individuals in New York metro such as Manhattan, The Bronx, Brooklyn, Queens, and Staten Island often require professional IRS help to resolve tax related issues. The tax laws, state and or federal tend to be complicated and you rarely have a very good understanding of the laws as they pertain to you or your tax matters. Unfortunately, the IRS has no sympathy for your lack of knowledge and will not accept that as a valid excuse.
What is an IRS Tax Settlement?
An IRS tax settlement is an agreement between you and the IRS regarding what you owe them. It is a negotiation where you pay an amount that is less than you originally owed. The IRS is often willing to take a deal rather than to have to continue to fight to get funds owed to them. This is especially true if it isn’t possible for the person or business to pay what is owed.
An IRS tax settlement also involves various penalties, interest, and fines being removed from what is owed. When all of that is added on, it can increase the overall debt dramatically. Many people don’t realize that they can offer an IRS tax settlement and get out from under that stressful situation.
While they do prefer to get the full amount of money that is due to them, they are realistic about it. They don’t want to be hassling people or businesses for money. They also know that you can’t get blood out of a turnip. Don’t ignore the IRS when they tell you that you owe them money. Instead, see what you can do through a tax settlement offer.
Want to reduce your unpaid IRS debt with an Offer in Compromise?
Many taxpayers with back taxes contact us on a daily basis to see if qualifying for an offer in compromise settlement can save them thousands of dollars in taxes, penalties and interest. The widely known offer in compromise settlement is an agreement between the taxpayer and the IRS to settle the taxpayer’s full tax liabilities for possibly less than the full amount owed. Each taxpayer’s, RCP, reasonable collection potential, is different and an offer will not be accepted if the IRS believes that the full unpaid tax liability can be paid in full as a lump sum or through a payment agreement.
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service (IRS) that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through an installment agreement.
In most cases, the IRS will not accept an OIC offer in compromise unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential (RCP). The RCP is how the IRS measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, bank accounts, and other property. The RCP also includes anticipated future income, less certain amounts allowed for basic living expenses.
The IRS may compromise the taxpayer’s back tax liability in most civil or criminal cases before referral to the Department of Justice for prosecution or defense. The Attorney General or a delegate may compromise any tax case after the referral. However, the IRS may not compromise certain criminal liabilities arising under internal revenue laws relating to narcotics, opium, or marijuana. Interest and penalties, as well as tax, may be compromised (Code Sec. 7122; Reg. §301.7122-1). IRS Offers-in-compromise are submitted on Form 656 accompanied by a financial statement on Form 433-A for an individual taxpayer or Form 433-B for a business taxpayer (if based on inability to pay) (Reg. §601.203(b)). A taxpayer who faces severe or unusual economic hardship may also apply for an offer-in-compromise by submitting Form 656. If the IRS accepts an offer-in-compromise, the payment is allocated among tax, penalties, and interest as stated in the collateral agreement with the IRS. If no allocation is specified in the agreement and the amounts paid exceed the total tax and penalties owed, the payments will be applied to tax, penalties, and interest, in that order, beginning with the earliest year. If the IRS agrees to an amount that does not exceed the combined tax and penalties, and there is no agreement regarding allocation of the payment, no amount will be allocated to interest.
You recently asked what will happen and what you should do in the event that you cannot pay your taxes on time. First and most importantly, don’t let your inability to pay your tax liability in full keep you from filing your tax return properly and on time. It is also important to remember that an extension of time to file your tax return doesn’t also extend the time to pay your tax bill. Get tax resolution services at 1-877-788-2937.
Even if you can’t make full payment of your liabilities, timely filing your return and making the largest partial payment you can will save you substantial amounts in interest and penalties. Additionally, there are procedures for requesting payment extensions and installment payment arrangements which will keep the IRS from instituting its collection process (liens, property seizures, etc.) against you. Get tax resolution services at 1-877-788-2937.
Overview of the most common penalties. The “failure to file” penalty accrues at the rate of 5% per month or part of a month (to a maximum of 25%, reached after five months) on the amount of tax your return should show you owe. The “failure to pay” penalty is gentler, accruing at the rate of only 0.5% per month or part of a month (to a maximum of 25% reached after fifty months) on the amount actually shown as due on the return. If both apply, the failure to file penalty drops to 4.5% per month, so the total combined penalty remains at 5%–thus, the maximum combined penalty for the first five months is 25%. Thereafter, the failure to pay penalty can continue at 0.5% per month for 45 more months, yielding an additional 22.5%. In total, these combined penalties can reach 47.5% of your unpaid liability in less than five years.
Mike Habib is an IRS licensed Enrolled Agent who focuses his tax practice on helping his clients resolve their tax controversy matters. His tax relief firm is rated “A” by the better business bureau, which is quite rare for this industry as many are rated “F” or already ceased business operations like American Tax Relief and Nationwide Tax Relief and possibly many more to come.
Do you have IRS tax problems?
Don’t procrastinate anymore; call Mike Habib at 1-877-788-2937 for a free analysis of your tax situation. There are solutions to your tax problems.