An “Offer in Compromise” is an agreement between you, the taxpayer, and the IRS. This agreement settles the taxpayer’s legal responsibility for what is owed to the government, for less than the amount originally owed. Once an OIC is accepted, the taxpayer will pay what they can afford, not what they owe. This is different than an Installment Agreement. Many times we can settle your tax liability for a small fraction of what you owe.
At Martelle Law we take pride in our success in arranging several of these tax settlements for our clients.
There are three reasons the IRS will consider an offer in compromise.
“Doubt as to collectibility” — Most offers in compromise are based on the concept of “doubt as to collectibility.” In these cases, the IRS doubts that it will be able to collect the amount owed.
“Doubt as to liability” — This occurs when there is a dispute over the existence of the tax owed or a dispute over the amount of the tax owed.
“Effective tax administration” – In this situation, there is no doubt that the tax is owed and that the tax could be paid. However, an OIC might be considered in this instance if the taxpayer can prove that he or she has certain, unique financial circumstances that would make repaying the taxes grossly unfair, create a severe economic hardship or be deemed inequitable.
Doubt as to Collectibility
We negotiate with the IRS based on the following:
The total worth of your assets after having subtracted the loans against them.
Your earnings compared to your expenses.
When determining the amount you can afford to pay under an OIC, the IRS attempts to collect as much as they could receive from your income within a five-year time span.
There are typically two repayment options for your IRS settlement. One is a cash settlement due within 90 days of the IRS’ acceptance of your OIC. The other option is a “short term deferred plan.” This repayment option is an installment plan that must be paid within 90 days.
Obtaining an offer in compromise is complicated. The government does not easily relinquish its right to collect your taxes. The IRS has to be thoroughly convinced that you are unable to pay off your unpaid taxes.
We work with you to ensure the IRS understands your situation and accepts an offer in compromise on your behalf.
We aggressively represent your interests by:
Gathering the information and documentation needed to propose your OIC.
Properly presenting your package to the IRS in a timely manner, in the location most likely to be accepted. There are several places to file Offers.
Complying with all IRS requests for additional information.
Negotiating with the IRS to resolve your issue for the least possible amount.
Filing an appeal if your case is rejected.
Or, if necessary, filing a court action asking for federal acceptance of the OIC.
While an OIC is pending, the IRS won’t take any additional steps to collect on the taxes due. Additionally, after filing, you could acquire a levy release and you might be able to discontinue payments toward an installment agreement.
When we file your OIC, we are committed to representing you for the entire length of the process, even if it takes up to a year. We won’t quit, and we will fight vigorously for your rights. We will get your matter accepted and then settled.
The Truth of the Matter:
Determining whether your tax advisor or lawyer is selling you “Pennies on the Dollar” or authentic results.
Here’s what you need to know about the claims made by some of the so-called tax help organizations that flock to your doorstep after you get into trouble with the IRS.
Once a lien has been filed against you, scammers will mail you advertisements. Each will claim they can get your taxes settled for “pennies on the dollar.” You will likely notice similar advertisements on television and in newspapers and magazines – all claiming they will reduce your tax liability for a small fraction of what you owe.
Once you respond to them, they will want to charge you from $3,500 to $6,000 in representation fees just to speak on your behalf during IRS proceedings. Unfortunately, you might not even qualify for an OIC in the first place.
We have heard horror stories of people ripped off in this manner. They have gone through the entire process only to be told: “Sorry, the IRS will not accept your offer.” This disappointment comes after spending thousands of dollars and hundreds of hours of time on the matter. More often than not, the people who respond to such ads wind up with more problems after having used a bogus firm for help.The Internal Revenue Service will not settle with you without a justifiable reason. There is a list of criteria that IRS employees must follow prior to acceptance of any settlement. There are different levels of review that must be passed before an offer is accepted.
Facts
In a recent year, there were about 122,000 OICs filed.
Out of those 122,000 filings, only about 12,000 were accepted. That’s less than one in ten!The Better Business Bureau has received a multitude of complaints filed against so-called tax relief organizations.
Several of these companies have been sued and have lost the lawsuits filed against them. The penalty for their scare tactics? Having to pay out large damage settlements.
Martelle Law will give you a free, NO BULL evaluation. We will immediately inform you if you qualify for an offer in compromise or another form of tax relief. We will not place you in an offer that has little chance of success.
