IRS Tax Offer in Compromise: This is a program offered by the IRS that allows taxpayers to settle their tax debt for less than the full amount owed. It is designed for individuals who are unable to pay their taxes in full or who would face financial hardship if they did so.
Tax Debt Relief: This refers to any program or strategy that is used to help individuals who owe taxes to the IRS. It may include options such as installment agreements, penalty abatement, and offers in compromise.
Tax Settlement: A tax settlement is an agreement between a taxpayer and the IRS to resolve tax debt. It typically involves negotiating a reduced payment amount or a payment plan that is more manageable for the taxpayer. This can be done through an offer in compromise or other tax relief programs.
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What is a Tax Offer in Compromise?
For appropriate cases involving IRS tax debt settlements, the IRS will accept a taxpayer settlement in an amount less—in many cases much, much less—than the total amount of taxes, penalties and interest owed by the taxpayer. This IRS program is known as an Offer in Compromise IRS (Form 656). If utilized correctly, this program can reduce an income tax debt literally to “pennies on the dollar”.
Our tax negotiation professionals have resolved cases in which a client has owed the IRS over $100,000 and settled with the IRS for less than $1,000. Obviously, not all clients are eligible for such profound savings, and each client’s personal tax situation is unique.
However, for many of our clients, utilizing the IRS Offer in Compromise guidelines can be the best tool to settle back taxes. Call now to see if you are eligible.
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Many people believe the process simply involves filling out a few forms, sending them to the IRS and obtaining a “pennies on the dollar” settlement. Some taxpayers believe it is simply a matter of calling the IRS, and proposing a highly discounted settlement. This is usually not the case. Often, making that call will harm your chances of getting the best settlement possible, rather than helping it.
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How to Get an Offer in Compromise Approved
Once the IRS has had a chance to determine your financial statements, unless you have prepared and presented those statements in accordance with the best accounting and tax practice, you may have difficulty getting the best possible settlement.
That’s where My Tax Help MD comes in. We will not only lay out the necessary Tax Offer in Compromise guidelines and steps needed to obtain a settlement, but we will walk you through the entire process.
Additionally, we will draw on and apply our multiple years of experience to present your case in the best way possible. IRS Offer in Compromise guidelines require proof. Applicants must prove beyond any reasonable doubt, that they will be incapable of meeting their necessary living expenses after paying an outstanding tax debt through a conventional installment agreement.
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There are two major elements to this process. First, in order to achieve success and to receive Tax Offer in Compromise help, you must deliver a properly prepared application to the IRS following guidelines. Our IRS tax settlement experts will prepare this document with you.
The second vital element is the presentation of evidence that the taxpayer will not have any funds left over to pay the IRS, once all necessary living expenses are paid for. Our staff will help you organize and present these materials in the best possible light.
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What Comes Next?
After the proper submission of the application is complete, and assuming the taxpayer is eligible for the program, the IRS will grant the taxpayer a settlement in lieu of the actual amount of back taxes owed.
Again, this settlement can often be much less than the original debt. IRS Offer in Compromise IRS forms must be completed properly in order to present the IRS with the proper evidence required for the Offer in Compromise Program, the taxpayer is required to submit a financial statement known as Form 433-A.
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In this financial statement, the taxpayer discloses their assets, income, and necessary living expenses. Based on this financial disclosure, the IRS considers how much income a taxpayer is earning, as well as the amount of money the taxpayer has to pay in order to support their family. These support costs will be permitted by the IRS to be deducted before making the determination of how much income remains for servicing the taxpayer’s tax obligation.
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However, the IRS can be very restrictive when considering what should and should not be a “necessary living expense.” For example, the IRS considers an automobile payment of $400 a month to be reasonable. In cases where the actual payment exceeds $400, the IRS will grant the taxpayer the $400 maximum to deduct, but will deem the excess an unnecessary expense.
Transportation expenses are another good example. For a household with one vehicle, the IRS only allows $235 a month for expenses relating to the operation of that vehicle, including gasoline. Because of rising gas prices, this amount becomes more and more outdated by the year.
However, the IRS has not changed its policy on this expense. Knowing the best way to present your finances in the applicable financial disclosure forms, is a key component to working out a feasible settlement. Our tax professionals have completed literally hundreds of applications and disclosure forms and know exactly how to best present your situation.
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If you qualify for the Tax Offer in Compromise program… the professionals at Tax Help MD can guarantee that we can help get you a settlement for a fraction of the amount you would otherwise owe. Call (888)557-4020.
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