OIC – Doubt As To Liability

OIC – Doubt As To Liability

There are three types of Offers in Compromise:

  • Doubt as to Collectability – Does the taxpayer actually have the income and assets to pay back all the taxes owed?
  • Doubt as to Liability – Does the taxpayer really owe all that the IRS is looking to collect? Is there a dispute here?
  • Effective Tax Administration – While the IRS has every right to collect the tax debt in full, it may create an undue hardship to the taxpayer given special circumstances such as age or health.

My firm, By The Book Taxes, located in Norwalk, CT specializes in income tax preparation for individuals, families and self-employed people. By the Book Taxes also helps clients resolve their tax debts by preparing and filing Installment Payment Agreements, Offers-in-Compromise, Currently Not Collectible and Innocent or Injured Spouse applications.

By definition, an Offer in Compromise  is appropriate when the IRS is willing to settle a taxpayer’s debts for less than the full amount owed.

Doubt as to liability arises when the taxpayer contends that he or she doesn’t owe the money that the IRS is attempting to collect. This could arise in a case of mistaken identity where the IRS is attempting to collect from the wrong John Smith, or more likely, in a payroll tax case where the taxpayer claims that they are not a responsible party regarding the unpaid company payroll taxes.

The taxpayer is not required to submit personal financial information but is required to submit documentation proving that they either are not the person the IRS thinks they are or are truly not responsible for non-payment of payroll taxes.

They must make an offer to settle the debt, not zero, be in tax compliance for the next five years and attempt to recoup any monies levied by the IRS through other procedures away from the offer process, like audit reconsideration.

If you have years of unfiled tax returns or owe the back taxes, please call me. I can help.

OIC – Doubt As To Collectability

OIC – Doubt As To Collectability

There are three types of Offers in Compromise:

  • Doubt as to Collectability – Does the taxpayer actually have the income and assets to pay back all the taxes owed?
  • Doubt as to Liability – Does the taxpayer really owe all that the IRS is looking to collect? Is there a dispute here?
  • Effective Tax Administration – While the IRS has every right to collect the tax debt in full, it may create an undue hardship to the taxpayer given special circumstances such as age or health.

My firm, By The Book Taxes, located in Norwalk, CT specializes in income tax preparation for individuals, families and self-employed people. By the Book Taxes also helps clients resolve their tax debts by preparing and filing Installment Payment Agreements, Offers-in-Compromise, Currently Not Collectible and Innocent or Injured Spouse applications.

By definition, an Offer in Compromise  is appropriate when the IRS is willing to settle a taxpayer’s debts for less than the full amount owed.

Doubt as to collectability arises when the taxpayer does not dispute the amount of tax owed but cannot pay the tax in full during the ten year statutory period the IRS has to collect the debt, usually ten (10) years after the tax return is filed.

The taxpayer must submit a personal financial statement called a Collection Information Statement, Form 433-A, listing monthly income, living expenses, assets and other debts along with three (3) months of documents like bank statements and utility bills to substantiate the expenses.

The IRS has a formula called RCP or reasonable collection potential which uses the taxpayer’s financial information to determine how much they can pay and what the IRS will accept to settle.

For a more detailed explanation of RCP, read this blog, https://activerain.com/blogsview/5329707/norwalk–ct–the-secret-sauce-of-tax-resolution—-rcp- or watch this YouTube video, https://www.youtube.com/watch?v=9tdctyR7hYM

If you have years of unfiled tax returns or owe the back taxes, please call me. I can help.

First Time Abatement (FTA)

First Time Abatement (FTA)

The IRS has a program where you may qualify to have penalties for late filing of tax returns, late payment of taxes or late deposit of payroll taxes (if you have a business and employees) “abated” or removed and either applied against other tax years, the current tax year or even refunded to you.

The program is called “First Time Abatement” or “FTA” and it covers tax years 2001 to the present.

My firm, By The Book Taxes, located in Norwalk, CT., specializes in income tax preparation and tax resolution services.

Here’s how FTA works:

  • Have a tax professional pull your tax history for years 1998-2018
  • Look for a tax year that had significant late filing or late payment penalties
  • If the three (3) tax years prior to the penalty year are “clean” (no penalties), the IRS will “abate” (remove) the tax penalties for that year.
  • You can then use the abated taxes to pay down balances for other tax years, pay estimated taxes for the current tax year or have them refunded to you.

If you think you might qualify for “first time abatement”, please call or email me. I charge a contingency fee based upon how much I can recover for you but there is no cost to you if I do the research and you don’t qualify.