Fact or Fiction?
If you have tax problems it seems like wherever you look you will see ads from businesses offering to settle your taxes for “Pennies on the Dollar” for “As little as the change in your pocket”. If you have a tax lien filed against you, you will become flooded with letters and flyers and phone calls from businesses wanting to settle your tax liability for you. They will all offer to settle your tax liability through an OIC.
Is this true? Can taxes really be settled for much less than you owe?
Well the real answer is maybe. But only if you qualify. And qualifying is not easy. The IRS will not just hand out a settlement for a fraction of what you owe without you showing a severe hardship.
These unscrupulous so called “Tax Relief Organizations” will often make promises to you that they will do an Offer in Compromise and settle your tax liability. Then they will take thousands of dollars in fees from you. Then a year later will tell you that the IRS won’t accept your OIC, sorry, but you will have to pay the taxes.
In fact in many of these cases an Offer was not a reasonable alternative. Offers in Compromise are not easy to obtain from the Internal Revenue Service. They do not accept them unless there are serious doubts as to whether they will be able to collect the taxes.
What can a consumer do to protect themselves from these scam organizations that simply want to take big fees and not deliver:
First, before you give anyone a penny, check them out online. Do a Google search for Complaints against “ABC Tax Relief” or whatever their name is. Look at them to see whether they have complaints against them. Look at what their clients say about them.
Second, contact the Better Business Bureau and see whether they are listed with them and if so, how many complaints they have against them.
In my opinion, it is very difficult to tell a taxpayer whether they will qualify for an Offer in Compromise without having significant information about them. To determine whether an OIC will be accepted, we need to have comprehensive information about both a person’s assets and about their earnings. We also need to have information about how much their living expenses are. Only then are we able to recommend and Offer in Compromise as a viable option.
For more information about Offers in Compromise and what it takes to qualify for one, please visit our website: www.martellelaw.org/offer-in-compromise
Let the Buyer Beware.
There is much confusion among taxpayers as to how an Offer in Compromise works. Generally speaking to accept an OIC, the IRS wants as much as they believe they will be able to collect from the taxpayer over the next 4-5 years.
The amount the IRS will be able to collect from a taxpayer and hence the amount that they will be willing to accept in an Offer in Compromise is usually determined as follows:
First, they look at the value of all of a taxpayers assets. This is measured by what the quick sale value of the assets is. With a house, for example, they generally look at 80% of its current value, less the amount of the mortgages against the home. For vehicles, they use the same formula.
For a taxpayers personal property, generally they do not use the value of their household items and they allow a reasonable amount for tools of trade.
Then after determining how much the value of the taxpayers assets is, they look at income and expenses. To simplify, they want the amount of excess income times 48 or 60 depending on how the OIC is structured. For example if someone has $100 per month of excess income, the IRS will require either $4,800 or $6,000 depending. Then the amount of the value of the assets would be added to that to arrive at the Offer in Compromise amount.
We have simplified how an OIC works for purposes of this article. Offers in Compromise are very, very complicated and if not done very carefully, will almost certainly result in a rejection. A tax attorney is highly recommended to handle an OIC. For more information about Offers, visit our website: www.martellelaw.org/offer-in-compromise
It is no secret that the IRS has stepped up collection enforcement of past due taxes. They have been very aggressive lately about attempting to collect taxes that are past due. We have also noticed an increase in the number of audits being conducted.
What this means to taxpayers is that once the IRS has sent out the notices required before pursuing forced collection, the time period is very short before they start seizures.
The Internal Revenue Service has powerful tools at its disposal for the collection of taxes. The main way the IRS collects past due taxes is through levies. They also can file liens that affect taxpayers.
A levy is an actual seizure of an asset. The two main assets seized by the IRS are bank accounts and wages.
When the IRS serves a Notice of Levy on a bank account, the bank must freeze any money in the account when the levy hits and after a period of time turn the money over to the IRS. It does not matter if there are outstanding checks written against the funds. They are frozen and turned over to the IRS. If there is a levy of a bank account, prompt action may result in the release of the funds.
A wage levy is one of the most devastating things that can happen to a taxpayer. The IRS can seize the majority of a taxpayer’s earnings, leaving them without enough to live on. Worse yet, a wage levy is continuous and remains in effect until the whole tax liability is paid or until the levy is lifted by action of the taxpayer’s representative.
We can help! We routinely are able to get levies lifted if they do not leave the taxpayer with enough income to pay necessary living expenses. It is a complicated process to get a levy lifted in most cases. There are a number of steps which must be taken to obtain a levy release.
There is no doubt that the Internal Revenue Service has incredible power to collect taxes. Where a regular creditor must obtain a judgment to levy against someone, the IRS doesn’t have that restriction. After sending the necessary notices, they are free to start collection by seizure of assets.
The single most important thing a taxpayer can do if they have a large tax liability is to obtain a competent tax attorney to assist them.
It is no secret among tax professionals that the Internal Revenue Service has begun attempting to collect past due taxes with a vengeance. It appears from what we are seeing that there is a definite trend towards the IRS taking a much harsher position with taxpayers who have past due taxes.
The IRS has an incredible amount of power available to them to collect taxes. Once they have sent a series of notices they can seize assets such as vehicles or business assets. They can levy on bank accounts and take all funds in the account. They can also levy on paychecks taking most of the paycheck. A paycheck levy continues until the total of taxes, penalties and interest is paid in full, unless it is released. In some circumstances they can even sell a person’s home out from under them and apply the proceeds to the tax liability.
The stunning part of these collection alternatives is that once they have sent the notices they can seize the assets, bank accounts or paycheck without any court action or other notices to the taxpayer.
What this means to taxpayers is that once they start getting collection notices from the IRS that they should contact a Tax Attorney and take steps to insure that the matter is resolved without seizure. There are a number of things that a Tax Professional can do to avoid levy. Some of them are(for more information click on the item):
If you have Tax Problems, you need Tax Help from a Tax Attorney NOW!
For a free consultation, please CLICK HERE
If you are faced with IRS or state tax problems, it can be an awful experience. The IRS and most state taxing authorities can be relentless in trying to collect past due taxes.
The Internal Revenue Service has incredible powers to collect past due taxes. After having sent the required notices, they can actually seize property without a court order. They can Levy wages, take bank accounts and file liens against property. Wage levies are ongoing. Once they start taking a paycheck, they won’t stop until the tax, interest and penalties are paid in full.
These actions can leave people without the means to pay necessary living expenses. Fortunately, there are a variety of things that can be done to resolve tax problems. They include (click on subject for more information)
These are a few of the most common ways of resolving tax problems. For more information, please visit our website at www.martellelaw.org
Our tax attorneys are able to provide you with a free consultation to determine if we can help with your tax problems. To contact us CLICK HERE
