Special offer

Medford Oregon: IRS Offer in Compromise – The Pros and Cons.

By
Education & Training with First Response Resolution, LLC

Welcome to First Response Resolution, LLC’s official blog! We are a specialty tax firm practicing in the Rogue Valley of Southern Oregon. The focus of my practice is solving tax problems for individuals and businesses, IRS Representation of taxpayers, and representing taxpayers before their individual State Departments of Revenue. These services are referred to in many ways such as Tax Problem Resolution, Tax Relief Services, Tax Resolution, IRS Resolution, Tax Controversy, etc. Think of our firm as your Financial First Responders who specialize in saving troubled taxpayers. We help people who are struggling with tax problems get their lives back on track so they can focus on what matters most to them.

As we wrap up our series of posts on the IRS Offer in Compromise program, we will take a look at some of the Pros and Cons of this collection alternative. The various aspects of the program are taken into consideration with each client evaluation. In short, the IRS will examine the taxpayer’s gross income each month and determine the amount that should be available for collection, after the allowable expenses are factored in. If the monthly cash flow that is determined to be available for collection will full pay the tax liability within the Collection Statute, the taxpayer is deemed to NOT qualify for an Offer. If the taxpayer cannot pay their liability in full before the Collection Statute Expiration Date, they can make an offer to settle their debt. The offer will consist of two parts: Future Income left over after allowable expenses each month which will either be multiplied by 12 months for a Lump Sum Offer or 24 months for a Periodic Offer. The second part of the offer calculation consists of available equity in the taxpayer’s assets and the IRS will expect that all available equity be included in the offer.

Pros to the Offer in Compromise:

  • Settling the tax liability for LESS than what is owed! Sometimes, much less!
  • Being relieved of the large burden and stress from owing back taxes.
  • No longer worrying about assets being levied by the IRS.

Cons to the Offer in Compromise:

  • Taxpayers must maintain tax compliance for 5 years after the offer is accepted or the offer is deemed to be void and the original tax liability, minus whatever was paid with the offer, is reinstated as legally enforceable tax debt.
  • Taxpayers must come up with the funds to pay the amount offered or the agreement will default. This may require that funds be borrowed to settle the liability.
  • Filing an Offer tolls the Collection Statute Expiration Dates (CSED). This gives the IRS longer to legally enforce collection. The CSED is extended for the period during which the offer is pending, and if the Offer is rejected, there is an additional 30-day addition to the CSED to account for the period of time in which the taxpayer has a right to appeal. If the taxpayer appeals the decision, the CSED is extended for the time that appeals is pending.
  • Offers that are submitted and deemed processable by the IRS take a long time to be reviewed and a decision to be made. Offers typically take the IRS anywhere from 6 to 18 months to process, but no more than 24 months. If the IRS deems the offer to be processable and they don’t reach a decision within 24 months, the offer is deemed to have been accepted.

The IRS and taxes in general can be complicated and intimidating. If you have received IRS Notices regarding back taxes owed and are facing potential Tax Liens and Levies, it is well advised to seek competent representation when dealing with the IRS. Most people would not go to court and face litigation without an attorney, and it is in your best interest to engage a qualified representative to deal with the IRS on your behalf. If you or someone you know is in the midst of an IRS issue, contact me at either 541-293-8449, by email at zach@firstresponseirs.com, or through our website. We specialize in solving tax problems! We know how to defend taxpayer rights and will thoroughly investigate and evaluate your specific situation and consider ALL OPTIONS available to you. All discussions are kept strictly confidential, and we offer no obligation initial consultations of up to one hour.

Is your agency interested in having me speak to your team of realtors in person or over Zoom at one of your weekly sales meetings free of charge? I have a presentation developed to address the following:

  1. Taxation and your clients,
  2. Tax tips for saving on your own tax returns, and
  3. Tax Problem Solutions.

 

Contact us today!