National Tax Relief - Tax Secrets
For both an Offer in Compromise and Installment Payment Plan the ultimate goal is for you, the taxpayer, to pay only what you can afford without destroying your ability to earn a living or put you below the poverty level. Most people think that once the IRS gets after them, that the IRS wants everything they make now, everything they will make in the future, plus to take all of their assets away. But this is not their goal. Their goal is to collect as much of the tax debt as possible while leaving the taxpayer the ability to enjoy the fruits of their labor. To do otherwise would be contrary to public policy.
As you can imagine, this is a thin line for both the taxpayer and the IRS to walk. Unfortunately, the IRS is prone to take the low road and try to get everything all at once - especially with an overzealous collection agent or when there is some suspicion that there is not full cooperation from the taxpayer. Because this is often an adversarial position, the taxpayer usually needs the help of an expert to keep the IRS from exercising their power without the taxpayer having the ability to exercise their rights.
The Taxpayer's Rights in this case have to do with how much the IRS can take from the taxpayer in either an Installment Agreement (Payment Plan) or an Offer in Compromise. The determination of the amount the IRS can take under its own guidelines as authorized by Congress is key to both of these. Let's begin with the Payment Plan, as this number is key for determining what the taxpayer should pay in an Offer in Compromise.
Determination of What the IRS Can Take in a Payment Plan
The basis for the Payment Plan amount that the IRS would expect you to pay as a taxpayer is quite simple. The IRS expects you to pay all disposable income after paying your necessary living expenses but without creating economic hardship. This is somewhat vague, so the IRS has put in place some standards which determine what amounts are allowable for a given-sized family with allowance taken for regional cost variations for things such as housing.
These IRS standards look at the number of people in the household of the taxpayer, the number of vehicles, income, and the county in which the taxpayer lives. The IRS has developed a table which has every county in the United States listed for its standard allowable household and transportation expense. Gross income is important in that the standard tax tables are applied to this with consideration given for the number of family members. Should you choose to use a trained specialist with expertise in tax resolution, they will apply the proper tables to your individual income level, county, number of vehicles, and number of family members.
Additionally, the IRS will take consideration of your special circumstances. If you currently have a $1,500 per month mortgage or rent payment and the standard allowed for your county and family size is only $770, then you are given a leeway of one year to make payments at the higher level and subtract these excess payments from your monthly payments to the IRS. Similarly, you will be given a one year allowance for children in college and the expenses associated. However, in both cases you will not be able to exclude these payment from what you give the IRS in a payment plan for more than a year. You could be forced to move and your children could be forced to drop out of college if you don't reach a permanent settlement with the IRS. The IRS will also make allowances for such things as ongoing medical expenses for any member of your family, as long as these can be proven. This would give you an addition to the allowance for standard household deduction. Similarly, you may have additions to the number of vehicles allowed and the operating expenses associated with those vehicles if they are required for earning your living. Should this sound too complicated, our trained tax resolution specialists can provide this expertise for you.
Determination of What to Pay the IRS as Full Settlement of All Tax Debt
Once again, the IRS is limited in what they can take from you in full settlement of your total tax debt. The basic formula is 48 times your payment plan amount as determined above, plus the liquidation value of all of your assets. If the total of this is less than the amount the IRS claims you owe them, then you may submit an Offer in Compromise. Do not submit an Offer in Compromise if the calculated value of your payment plan amount multiplied by 48 plus the liquidation value of your assets is greater than the amount the IRS claims you owe them. To do so will add a minimum of one year to the time the IRS can legally try to collect this tax debt, and in most cases 16 months will be added to this time for collection (known as the 'statute of limitation'.) There are additional exclusions which are not counted into the liquidated value of your assets which are statutory in nature. These are things like tools of the trade and household items, but the forms required for proof by the IRS are quite extensive and intrusive as to your financial and personal life. However, if you do not fill them out, and fill them out properly, you will get no relief from the IRS. You may contact us here or call (800) 476-2979 for more information on how we can make this process easier.
Pay What You Can Afford in An Offer in Compromise
The Offer in Compromise is designed in a way so that you can pay off the tax debt to the IRS, but it is really designed to be something which allows you to get the IRS out of your life in an affordable manner. The IRS understands that it is counterproductive to the public good to put people out of their homes and into poverty. It costs more to do that than they can collect. The Offer in Compromise, simply put, is a way to prove to the IRS that what you can afford to pay them is less than the total debt they claim you owe them. You are showing them that no matter how hard they try to collect, they will never legally be able to get more than what you are offering them. The only way to succeed at this is to prove it to them under their terms and conditions. This includes using their forms and their measures of evaluation as to what the liquidation value of your assets are. Further, it includes measuring the future stream of payments you could make to them at a discounted value. If the statute of limitations has only two years to run before expiration, then the amount you would be expected to pay is greatly reduced. Remember, however, that the time you spend in an Offer in Compromise stops the statute of limitations clock from ticking.
The IRS values real estate at 80% of fair market value. If your home is worth $100,000 you must write down $80,000 for the value of your home when filling out the forms. If you do not subtract the 20% from the value of the home, the IRS in this case would expect you to pay that $20,000 extra value you gave to your home to them. If you want to know exactly how this can apply to your specific situation and have it explained in detail, just contact us here or call (800) 476-2979 and a trained tax resolution specialist will gladly go through this with you.
If you have an ongoing chronic health condition which requires medical attention and medicines not covered by your medical insurance, then you may add these to your allowable expenses and thus reduce the amount you would pay the IRS in an Offer in Compromise. An example is someone with high blood pressure who requires $200 worth of medication and medical services not covered by insurance each month. This would reduce the amount you would normally offer the IRS in an Offer in Compromise by $9,600 (48 x $200). This makes a tremendous difference when our goal is to have most of our clients pay between $1,500 and $5,000 in full settlement of what the IRS claims is owed. If you want to know exactly how this can apply to your specific situation and have it explained in detail, just contact us here or call (800) 476-2979 and a trained tax resolution specialist will gladly go through this with you.
Right now, if the IRS claims you owe them for unpaid taxes, you are paying interest and penalties on the balance. This is compounding at a breathtaking rate. But it can be stopped with an Offer in Compromise almost 100% of the time, even if you do not qualify for an Offer in Compromise in the traditional sense. Many people who owe the IRS for taxes could and would pay up if it weren't for the almost geometric increase in the balance of taxes due because of interest and penalties. Many people in Payment Plans with the IRS right now (you may be one of these) are making no headway in terms of paying off their IRS debt because the value of the interest and penalties built up each month ends up being greater than the monthly payment amount. This can be stopped with an Offer in Compromise. In this case, the amount owed to the IRS does not increase each month due to penalties and interest like a normal Payment Plan with the IRS. If you want to know exactly how this can apply to your specific situation and have it explained in detail without having to do a bunch of reading, contact us here or call (800) 476-2979 and a trained tax resolution specialist will gladly go through this with you. This can save you tens of thousands in interest and penalties.
The IRS has been freely tacking penalties on the money they claim you owe them for years. This has recently come under close scrutiny, and as a result the IRS is allowing Penalty Abatements. If you can show the IRS that there was reasonable cause - like something outside of your control - for nonpayment, not filing, or late filing, you will be exonerated from the penalties they have charged you. Imagine being able to remove all penalties and then doing an Offer in Compromise with a 5-year payment plan on the reduced amount as described in TAX SECRET No. 3 above. Even if you don't qualify for a normal Offer in Compromise you probably qualify for this combination of Penalty Abatement and Offer in Compromise. Once again, the amount owed the IRS will not increase each month due to penalties and interest as in a normal payment plan with the IRS. If you want to know how this can apply to your specific situation and have it explained in detail, contact us here or call (800) 476-2979 and a trained tax resolution specialist will gladly go through this with you.
Once you have entered into either a Payment Plan Agreement with the IRS or applied for relief through an Offer in Compromise, all collection action will cease. This means that no IRS agent will come to your house, no more threatening letters will arrive in the mail, there will be no garnishment of wages, and there will be no seizure of bank accounts or assets. You will be able to sleep at night
knowing that nobody will take your home, car, or hard earned wages. This is stated within the IRS's own rules. Our Professional Tax Specialists can do this for you and do it fast. If you want to know exactly how
this can apply to your specific situation and have it explained in detail, contact us here and a trained tax resolution specialist will gladly go through this with you.
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