Monthly Archives: June 2012
Tax Problems? Warning! Don’t get Scammed! Learn The Truth About Tax Settlement and the IRS’ Offer in Compromise!
Advice from a Partner at Advocate Tax Solutions, LLC:
Don’t get Scammed!
Hello, my name is Asher Mellul and I am the Director of Operations at Advocate Tax Solutions, LLC, a nationwide Back Tax Defense and Preparation Firm headquartered in the downtown Chicago area. Most of our clients owed more than $10,000 to the IRS, are or at one time were facing escalated collections in the next 30 days and had an inability to full pay their tax debt prior to engagement. SO it is safe to say I have seen my fair share of Offer in Compromises, and have also heard a few, for lack of a better word, doozies from clients that engaged ill prepared and inexperienced “tax relief companies” that for one reason or another did not or could not get the job done before they finally found us. I thoroughly believe that a Tax Defense and Back Tax Preparation Firm’s competitive edge comes starts from within. At ATS, we go to great lengths to attract, inspire and recruit talented Tax Attorneys, Certified Public Accountants and experienced support staff to ensure our edge remains vivid and transparent both at the initial consultation to the final case report.
Our competitors will tell you what you want to hear, just to gain your business. Don’t be misled and believe your tax problems can be fixed immediately, it will take a lot of work, and your investment in time to attain the best result. If you were told you qualify for an Offer in Compromise in a 15 minute conversation, it’s safe to say CONGRATULATIONS…you are being Ripped Off. There are many steps that must take place prior to any settlement with the IRS.
A thorough Back Tax and Financial Analysis is performed prior to making any offers to the IRS and is necessary to determine an accurate minimum settlement amount the IRS will accept. The reason? Simply put, included in your IRS Offer in Compromise Application is substantiation for all of your listed expenses, a written proposal and most importantly a check for the first settlement installment or the complete settlement amount (contingent upon which Offer in Compromise option you selected). The issue is, the IRS will review your offer in compromise then determine your eligibility. If rejected, they keep your money, credit it to the back tax debt, then you are back to square one, well, negative square one because you paid that tax thousands to submit the offer in compromise that they knew would get rejected.
Due Your Due Diligence! Research All Tax Firms on the BBB and Ripoff Report Before Dishing Out Big Bucks!
When processed correctly, an individual can successfully settle their debt with the IRS through the Offer in Compromise program. This program allows taxpayers to settle with the IRS on back tax debt that has either been incorrectly assessed or has created an economic hardship or would be unfair and inequitable for liabilities owed to be paid.
The IRS Code states: “We will accept an Offer in Compromise when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential…” (Internal Revenue Code section 7122).
If one is eligible for an Offer in Compromise (OIC), it is possible to fully and completely eliminate the taxes they owe – including penalties and interest. Fortunately, the IRS has no preset settlement amount, so if an individual(s) meet(s) these guidelines, experience and diligence is the only weapon to get the best possible deal. Our proprietary tax valuation method allows us to forecast the outcome and predict whether or not we believe it makes sense to submit an offer in compromise to the IRS and or State Taxing Authority.
Three Types of OICs
The IRS may accept an offer in compromise based on three grounds:
1 – Doubt as to Collectability – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
Example: A taxpayer owes $25,000 for unpaid back tax debt and agrees that the back tax he/she owes is valid. However, the taxpayer’s monthly income does not meet his/her necessary living expenses (more money going out (expenses) then coming in (Income)). He/She does not own any real property and does not have the ability to fully pay the Back Tax Lien now or through monthly installment payments (if you were to sell everything today, including your truck, there wouldn’t be enough to cover the tax debt).
2 – Doubt as to Liability – A legitimate doubt exists that the assessed back tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.
Example: The taxpayer was a partner of a corporation from 2006-2008. In 2009, the corporation accrued unpaid payroll taxes and the taxpayer was assessed a penalty as a responsible party of the corporation. The taxpayer was no longer a corporate officer and had resigned from the corporation in December of 2008. Since the taxpayer had resigned prior to the payroll taxes accruing and was not contacted prior to the assessment, there is legitimate doubt that the assessed tax liability is correct.
3 – Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
Example: Mr. & Mrs. Jones have assets sufficient to satisfy the tax liability and provide full-time care and assistance to a dependent child, who has a serious long-term illness. It is expected that Mr. and Mrs. Jones will need to use the equity in assets to provide for adequate basic living expenses and medical care for the child. There is no doubt that the tax is correct.
Advocate Tax Solutions is a nationwide tax defense firm engaged in practice before the IRS and now 47 State Tax Administrations. ATS is an accredited member of the BBB with 1000’s of clients all over the country, for a reason, we do business the right way. We submit hundreds of Offer in Compromises and specialize in filing emergency petitions for tax relief and back tax settlements.
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