I represent companies and individuals in the St. Louis, surrounding areas and the state of Missouri who have IRS and State Tax problems that include unfiled tax returns and past-due taxes. When your back is up against the wall with the IRS and don't know what to do and you hear those late-night commercials that you can settle your tax debt for pennies on the dollar sure sounds good doesn't it? But are you one of the lucky ones that can qualify? The Offer in Compromise program does allow a taxpayer to settle their back tax debt for less than what is owed under certain circumstances.
So what does it take in order to qualify?
1..You must be in tax compliance, meaning at least the last six years of tax returns must be on file.
2. You must be making their current tax payments.
There are two types of Offers-in Compromise:
* Doubt as to collectability Offer: This is an Offer where the taxpayer doesn't dispute what is owed, but cannot afford to pay the tax debt back. The taxpayer makes an offer to the IRs based upon their individual circumstances and can back it up with financial documentation.
* Doubt as to Liability Offer: This is an Offer where the taxpayer offers to settle the debt based upon being able to show they do not actually owe all of the tax. This type of settlement is very similar to audit reconsideration. Here a taxpayer provides documentation as to why they do not owe the money the IRS claims.
The two types of Offers:
Lump-Sum: This one the taxpayer agrees to pay the Offered amount with 5 months of the date of acceptance. How do you know what to offer? A taxpayer files the offer based upon two components to calculate what is called Reasonable Collection Potential which comprised two parts.
1. Net equity in Assets.
2. 12 Months of future income.
Short Term Deferred Offer: This formula is a little different in that a taxpayer will begin making monthly payments while the Offer is pending and will pay the balance over 24 months rather than six months. The other difference is the calculation is different in that 24 months of future income is used rather than 12 so you end up paying more in exchange for more time.
If you or someone you know are having IRS issues with past due taxes, audits or under a threat of a lien or levy being issued please don't hesitate to call me @ 636-397-2759, email me info@steveshapiroea@gmail.com. Enrolled agents are federally licensed by the Treasury Department at all administrative of the IRS.
Steve Shapiro, EA
Arch Tax Resolution
620 S. Benton Street
St. Charles, MO 63301
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