Tax
Relief
Tax Solutions
Offer in Compromise
This program was developed by Congress to help collect large amounts of outstanding tax in a relatively short period of time. Their assumption was to offer taxpayers a one-time opportunity to eliminate their debt for a fraction of what was originally owed, thus closing millions of costly collection cases. While the program has been and continues to be modified, it remains the most effective means for both taxpayer and IRS to bring permanent resolution. An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle, or “compromise,” federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:
- Doubt as to Liability – Doubt exists that the assessed tax is correct.
- Doubt as to Collectibility – Doubt exists that you could ever pay the full amount of tax owed.
- Effective Tax Administration – There is no doubt the tax is correct, and no doubt that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer’s OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable. – Source IRS
Qualifying for this program is relatively straightforward: The net worth has to be lower than the tax liability and the allowable disposable income needs to be lower than the IRS allowable living expenses. Once this has been achieved the IRS is willing to settle for literally “pennies on the dollar.” On average, the qualified taxpayer saves thousands of dollars, and the IRS, in turn, ends their costly collection process and gets a compliant taxpayer.
Because of the popularity of the program, however, millions of frivolous cases were submitted, bottlenecking the process. Now, each case is scrutinized and examined to the dollar. Any small miscalculation and the amount offered will skyrocket, or, even worse, be rejected altogether. Our Tax Attorneys, CPA’s and Enrolled Agents have extensive expertise with planning, preparing, and negotiating Offers in Compromise (“OIC”). If you qualify, an Offer in Compromise is frequently the ideal solution for resolving your delinquent tax liability. In the last published IRS statistics, the IRS reports that the average discount on accepted Offers was 88% (only 12 cents on the dollar was paid by Americans with accepted OICs). Given the savings possibilities on accepted OICs, our experienced team of Tax Attorneys, CPA’s and Enrolled Agents specialize in the Offer in Compromise program. Call us today to see if you qualify.
InstallmentAgreement
An Installment Agreement with the IRS allows taxpayers that do not qualify for an offer in compromise and cannot afford to fully pay their back tax liability the option to pay their tax liability through monthly payments. There are guidelines regarding how the IRS determines the payment amount and time frame for the agreement. Additionally, a taxpayer must be compliant with all past tax filings before establishing the agreement. Depending on the circumstances and the amount of time that the IRS has left to collect the tax debt, the Installment Agreement may pay all or part of the back tax liability.
Often when a taxpayer, without the representation of Drexler Tax Advocates, attempts to establish an Installment Agreement with the IRS they end up with monthly payments greater than they can reasonably afford causing them a financial hardship. While the taxpayer wants a payment that is manageable and affordable for their financial situation the IRS wants to collect the entire amount of the taxes as quickly as possible. Unfortunately for many taxpayers, situations like this, the taxpayers end up defaulting on their Installment Agreement causing the IRS to begin the collection activity all over again. Therefore, it is important to have an affordable Installment Agreement established properly the first time.
Penalty Abatement
Besides the Offer in Compromise, there is another, very effective program for reduction of an outstanding tax debt. If there were circumstances beyond your control that prevented you from paying your tax debt and led to delinquency, we can challenge the penalties and interest that have built up and negotiate them down. Relief from penalties falls into four separate categories. They are:
- Reasonable Cause – Mistake made by the taxpayer, ignorance of law, death, serious illness, unavoidable absence.
- Statutory Exceptions – Simple or complex legislative tax code changes.
- Administrative Waivers – Undue hardship, fire, flood, natural disaster, bad legal/tax advice.
- Correction of Service Error – Mistake made by the IRS. (Source IRS)
Lien Subordination
If there is a tax lien on your home or property, we can temporarily lift the lien and allow you to refinance or sell. This solution is especially useful when using equity in a property to pay off a negotiated settlement, and can also be a smart option to take advantage of favorable interest rates and market conditions. When you call, your assigned strategist can tailor this program specifically around your needs and time concerns, creating the most favorable outcome possible.
Innocent Spouse Rule
The tax debt that follows the break-up of a marriage can be the most destructive aftershock of a divorce. Many times innocent spouses find themselves liable for the old misdeeds of their significant others. The Innocent Spouse Law is intended to provide relief when an innocent spouse has been the victim of fraud. There are three types of Innocent Spouse relief: traditional Innocent Spouse relief, separation of liability, and equitable relief. Traditional Innocent Spouse relief is granted to join-filers (typically married couples) when one spouse was unaware of the erroneous item which created a tax liability; Separation of liability is primarily for join-filers who are currently separated, and equitable relief is for a spouse who should not be held liable and who fails to meet the two preceding determinations. In each Innocent Spouse determination, the non-electing spouse/partner will be notified and may participate in the proceedings.
In all of the Innocent Spouse adjustments, the IRS’ goal is to provide relief to the spouse who was unaware or not at fault for the creation of a tax liability; hence the IRS rules that it would be inequitable to hold the innocent spouse liable for any tax deficiencies.
Statute of Limitations
To ensure timely tax examinations, Congress has set deadlines for assessing taxes and making refunds or credit of tax. These deadlines are called statute of limitations. Without statute of limitations, a tax return could be examined and tax assessed, refunded, or credited at any time, regardless of when the return was filed.
Statutes of limitations generally limit the time the IRS has to make tax assessments to within three years after a return is due or filed, whichever is later. That particular date is also referred to as the statute expiration date. Statute of limitations will also limit the time you have to file a claim for credit or refund. Drexler Tax Advocates will enforce your mandated rights.
940/941 Business Taxes
We know how to protect you and your business. The IRS is very aggressive in their collection attempts for past due payroll taxes. This tax is due every operating quarter, the penalties assessed on delinquent payroll tax deposits or filings can dramatically increase the total amount owing in a matter of months. This is widely considered to be the worst form of tax debt as the IRS considers it “stealing” directly from the government. If these taxes are neglected long enough the IRS immediate action is to shutdown the business so that the 941 – payroll is not an increasing tax liability. All assets will be seized to satisfy the debt.
Should the closure and liquidation of the business not satisfy the tax liability the individual shareholders, officers, directors and employees will now be liable. The conversion of 941 payroll tax liability to individuals is called a Civil Penalty Trust. The Civil Penalty Trust attaches to personal Social Security Numbers and both collectively and individually attaches tax liens and tax liability.
Drexler Tax Advocates can stop bank levies and property seizures immediately, abate penalties and interest and arrange an affordable deferred payment offer wherein the reduced amount can be spread out over 3 years.
Drexler Tax Advocates can convert your case to a Civil Penalty Trust wherein the rules for settlement are much more lenient where we can have the tax liability virtually eliminated. Economic Hardship
There is no doubt the tax is correct and no doubt the amount owed could be collected, but an exceptional circumstance exists. This could be an economic hardship or full payment would be unfair and inequitable.
