IRS Tax Negotiation
There are two primary methods for negotiating tax debt with the IRS. Those methods are an Offer and Compromise and an Installment Agreement. Generally, an Offer and Compromise is more favorable for the taxpayer, however, the disclosure requirements are greater and the duration to negotiate and finalize an amicable agreement with the IRS is a more prolonged process. Sadek Law Offices, LLC is experienced in handling the below listed agreements with the IRS.
Offer and Compromise
An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through an Installment Agreement.
The IRS may accept an offer in compromise based on the following three grounds:
1. Doubt as to Collectibility.
Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.
2. Doubt as to Liability.
A legitimate doubt exists that the assessed 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.
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
Installment Agreements
For those who cannot resolve their tax debt an installment agreement can be a reasonable payment option. Installment agreements allow for the full payment of the tax debt in smaller, more manageable amounts.
There are different types of Installment Agreements, which allow you to pay IRS taxes over a series of monthly payments if you cannot pay in full. Below you find the most common types of Installment Agreements handled by Sadek Law Offices, LLC.
1. Guaranteed Installment Agreement.
This is the simplest type of Installment Agreement and is for taxpayers who owe $10,000.00 or less in taxes.
2.Streamlined Installment Agreement.
Intended for taxpayers that have tax debt of $25,000.00 or less. It is deemed streamlined because it will not require full financial disclosure.
3.Financially Verified Installment Agreement.
If you owe over $25,000.00 or you can't make the minimum monthly payment on a Streamlined Installment Agreement you want to look at getting this type of installment agreement.
4.Installment Agreement Over 100,000.00.
If you owe over 100,000.00 to the IRS, then you need a longer term installment agreement. Sometimes, the IRS in this case will require you to sell off assets to satisfy debt some of your debt before offering you this type of Installment Agreement.
5.Partial Payment Installment Agreement.
If you are truly unable to pay off your taxes, you can look to apply for a Partial Payment Installment Agreement which will require you to pay less than you owe in full over time, as part of your debt falls of each period due to the Statue of Limitations. This is rarely accepted and requires full financial disclosures.
