Offer In Compromise
Many times touted as a program that allows taxpayers to settle their debts for “pennies on the dollar,” the professionals at Regal Tax & Law Group, PC will be the first to tell you that there is no magic wand for eliminating federal IRS tax debt.
Firstly, not all types of tax debt are eligible for this type of settlement procedure. Secondly, and most importantly, this procedure requires an immense amount of disclosure and is not the best choice for all taxpayers.
In order to create an even somewhat informed basis for advice, a full financial for the taxpayer should be taken and assessed by a licensed tax professional. Regal Tax & Law Group, PC encourages all taxpayers to simply ask the company representatives they are interviewing if they are licensed attorneys or CPA’s. Eight hours of sales training just is not enough to get a taxpayer through this process.
Things To Consider For An Offer In Compromise
A general overview splits most Offers in Compromise (hereinafter “OIC”) into three groups: wage (W2) earners, self-employed/small business owners, and corporations. The vast majority of all types of Offer’s will require between 6-18 months of time with the Revenue Service after submission, and most taxpayers require approximately a month to gather all necessary items. While under consideration, taxpayers remain free from collection actions taken by the Revenue Service, but balances continue to exist and grow due to interest and penalties. Some items that are typically reviewed by the IRS when you submit an Offer in Compromise package are:
- Forms 433A or B, or both;
- Form 656;
- Bank statements;
- Mortgage statements;
- Asset valuation statements (401k or IRA statements);
- Vehicle ownership statements;
- Profit and Loss, formatted for year to date information;
- Medical cost invoices;
- Internal tax account histories.
California State Tax Offer In Compromise
The state of California Franchise Tax Board also has an Offer in Compromise procedure in place, but is even more onerous than the federal IRS in its requirements in the granting of a successful Offer.
Filing An Offer In Compromise
Neither the state of California nor the federal IRS provide statistics of accepted or successful Offer’s with or without professional help, but the overall failure rate is high. If you are considering undertaking an Offer in Compromise procedure, call Regal Tax & Law Group, PC now for a complimentary consultation with a licensed attorney.