Facing A Surprise Tax Bill? Here Is Why You Should Still File Your 2021 Income Tax Return By April 18th.

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Facing A Surprise Tax Bill? Here Is Why You Should Still File Your 2021 Income Tax Return By April 18th.

Why You Should Not Disregard The April 18, 2022 Filing Deadline

The most important thing everyone with a tax liability should do is file a return by the April 18th due date, even if they can’t pay in full, or request a six-month extension to avoid higher penalties for failing to file on time. Though automatic tax-filing extensions are available to anyone who wants one but keep in mind that these extensions don’t change the payment deadline. They act an extension to file and not as an extension to pay. With the extension you can include payment for what you can pay now to help reduce a potential late-payment penalty and interest charges.

Usually anyone who owes tax and waits until after that date to file will be charged a late-filing penalty of 5% per month. So, if a tax return is done, filing it by April 18th is always less costly, even if the full amount due can’t be paid on time.

Pay what you can

Interest, plus the much smaller late-payment penalty, will apply to any payments made after April 18th.  Making a payment, even a partial payment, will help limit penalty and interest charges. You should also consider other options for payment, including getting a loan to pay the amount due. In many cases, loan costs may be lower than the combination of interest and penalties the IRS must charge under federal law. Normally, the late-payment penalty is one-half-of-one percent (0.5%) per month. The interest rate, adjusted quarterly, is currently 3% per year, compounded daily.

IRS payment plans

There are two main types of payment plans that do not require the submission of financial disclosures.

They are:

  • Short-term payment plan – The payment period is 120 days or less and the total amount owed is less than $100,000 in combined tax, penalties and interest. A 180-day payment plan is also possible. However, as you are financing a liability with IRS, interest and the late-payment penalty continue to apply.
  • Long-term payment plan – The payment period is longer than the short-term payment plan. Payments are made monthly, and the amount owed must be less than $50,000 in combined tax, penalties and interest. In addition, for anyone who filed their return on time, the late-payment penalty rate is cut in half while an installment agreement is in effect. This means that the penalty accrues at the rate of one-quarter-of-one percent (0.25%) per month, instead of the usual one-half-of-one percent (0.5%) per month.

Taxpayers who do not qualify for either of these plans would be requires to submit financial disclosures in order to arrange for a payment plan with IRS.

Other options to consider:

Delayed collection

If the IRS determines a taxpayer is unable to pay, it may delay collection until their financial condition improves. Sometimes this is referred to as putting a taxpayer’s account on a Currently Not Collectible (CNC) status.  Once the account is placed on a CNC status, the IRS does not pursue collection activity against the taxpayer and the statute of limitations on the tax liabilities will continue to run. Additionally, the total amount owed will still increase because penalties and interest are charged until paid in full or otherwise settled.  Generally, unless the taxpayer’s financial situation changes, the account will remain on a CNC status until the tax liabilities expire. However, if the taxpayer’s financial situation improves the account will be taken off of CNC status so that the IRS can collect the taxes through full payment or an Installment Agreement.

Penalty relief

Some taxpayers qualify to have their late-filing or late-payment penalties reduced or eliminated. This can be done on a case-by-case basis, based on “reasonable cause”. Alternatively, where a taxpayer has filed and paid on time during the past three years, the IRS can typically provide relief under the “First Time Abatement Program”.

Offer in Compromise 

Established by the Internal Revenue Service, the Offer in Compromise Program is a formal application to the IRS requesting that it accept less than full payment for what you owe in taxes, interest, and penalties.  An offer in compromise may allow you to settle back taxes or IRS liability at a substantial discount on the basis of doubt as to collectability, liability, or effective tax administration. In addition, while your offer is under consideration, the Internal Revenue Service is prohibited from instituting any levies of your assets and wages.

While an offer in compromise can help pay IRS debt for less, most people do not have the necessary skills or knowledge of the IRS collection process to make an offer in compromise that is in their best interest.  Many people fill out the forms incorrectly, overstate their assets and income, and offer too much. Government figures show that 75% of offers are returned at the beginning due to forms being filled out incorrectly, and of the 25% that are processed, approximately 50% are rejected.

What Should You Do?

Individual taxpayers can file an extension using Form 4868. Extensions can also be filed online, which has the benefit that you’ll receive a confirmation code from the IRS notifying you that your extension was received.  Then you should promptly contact tax counsel.  Let the tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and offices elsewhere in California get you set up with a plan that may include being qualified into a voluntary disclosure program to avoid criminal prosecution, seek abatement of penalties, and minimize your tax liability. If you are involved in cannabis, check out what else a cannabis tax attorney can do for you. Also, if you are involved in crypto currency, check out what a Bitcoin tax attorney can do for you.

After July 15, 2020, Taxpayers Must Resume Making Payments To IRS Or Face Renewed Collection Action

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After July 15, 2020, Taxpayers Must Resume Making Payments To IRS Or Face Renewed Collection Action

On March 25, 2020 the IRS issued a press release  announcing a sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions in what it calls “The IRS People First Initiative”.

These new changes include issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection and limiting certain enforcement actions. The IRS temporarily modified its activities from April 1, 2020 through July 15, 2020. During this period, to the maximum extent possible, the IRS avoided in-person contacts.

Taxpayers who took advantage of The IRS People First Initiative tax relief and did not make previously owed tax payments between March 25, 2020 to July 15, 2020 need to restart their payments or face renew collection action by the IRS.

As the IRS continues to reopen its operations across the country, taxpayers who were in payment agreements and skipped any payments from March 25, 2020 to July 15, 2020 should start paying again to avoid penalties and possible default on their agreements.

Here’s what taxpayers should do to resume their payment agreements to the IRS, including Installment Agreements, Offers in Compromise, and Private Debt Collection program payments:

Installment Agreements

Taxpayers who suspended their installment agreement payments between April 1, 2020 and July 15, 2020, will need to resume their payments by their first monthly payment due date after July 15, 2020. Taxpayers should be aware that the IRS didn’t default their agreement, but interest did accrue, and the balance remained.

Taxpayers who had their bank suspend direct debit payments should contact the bank immediately to ensure their first monthly payment due date occurring on or after July 15, 2020 is sent to avoid penalties.

If a taxpayer can’t meet their current installment agreement terms due to a COVID related hardship, it is possible to have your agreement modified.  An experienced tax professional can see if relief is available for you.

Offer in Compromise

Pending Offers: If the IRS is currently reviewing a taxpayer’s submitted offer but hasn’t accepted it yet, the taxpayer should resume their required payments starting July 15, 2020. The IRS will amend the taxpayer’s offer to allow them to pay any skipped payments at the end of the offer period, if the offer is accepted.

Already Accepted Offers: If a taxpayer has an Offer in Compromise agreement, and the taxpayer was unable to make the payments on their accepted offer because of a COVID-19 hardship, the taxpayer should resume payments and make up the missed payments by July 15, 2020. If the taxpayer is unable to make up the missed payments, an experienced tax professional can see if relief is available for you.

Private Debt Collection

The IRS did not forward new delinquent accounts to Private Collection Agencies (PCAs) from April 1, 2020 through July 15, 2020, and PCA interaction with taxpayers was limited to inbound telephone calls unless requested by a taxpayer in a voicemail or correspondence.

Taxpayers who had their PCA payments on hold should resume payments by July 15, 2020. If a taxpayer can’t meet their current payment agreement terms due to a COVID related hardship, it is possible to have your agreement modified.  An experienced tax professional can see if relief is available for you.

Taxpayers Who Owe But Can’t Pay

Taxpayers who are experiencing a hardship or who have questions about their payments may still be able to get additional relief.  An experienced tax professional can see if relief is available for you.

An Opportunity For Taxpayers Who Owe The IRS

Do not think that if you owe the IRS your tax problem will disappear because of the measures being considered by the government. Instead you should be utilizing this valuable time to get yourself prepared so that when activity in this nation regains momentum, you are ready to make the best offer or proposal to take control of your outstanding tax debts.

As a prerequisite to any proposal to the IRS, you must be in current compliance. That means if you have any outstanding income tax returns, they must be completed and submitted to IRS.

Also, if you are required to make estimated tax payments, you must be current in making those payments. Fortunately, as we are now in 2020, taxpayers who expect to owe for 2019 should have their 2019 income tax returns done now so that the 2019 liability can be rolled over into any proposal and the requirement to make estimated tax payments will now start for 2020.

Remember that COVID-19 does not alter the tax laws, so all taxpayers should continue to meet their tax obligations as normal. Individuals and businesses should keep filing their tax returns and making payments and deposits with the IRS, as they are required to do.

Also, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations. In instances where statute expirations might be jeopardized during this period and a taxpayer is not agreeing to extend such, the IRS will issue Notices of Deficiency and pursue other similar actions to protect the interests of the government in preserving such statute.

The take away from this – use the Federal government’s downtime and continued uncertainty with COVID-19 to your advantage to prepare for the future.

What Should You Do?

You know that at the Law Offices Of Jeffrey B. Kahn, P.C. we are always thinking of ways that our clients can save on taxes. If you are selected for an audit, stand up to the IRS by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles (including Long Beach and Ontario) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. Also if you are involved in cannabis, check out what a cannabis tax attorney can do for you.  And if you are involved in crypto currency, check out what a bitcoin tax attorney can do for you.

Are You Considering The IRS Offer in Compromise Program To Settle Your Tax Debt?

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Are You Considering The IRS Offer in Compromise Program To Settle Your Tax Debt?

It just got more expensive to settle your tax debt with the IRS. The Application Fee for Offers In Compromise submitted on or after April 27, 2020 increases from $186.00 to $205.00.

An Offer in Compromise (OIC) is an agreement between a taxpayer and the IRS to settle a tax debt for less than the full amount owed. Generally, it may be an option for taxpayers who can’t pay their full tax debt, or if doing so would create a financial hardship. The IRS considers the taxpayer’s overall financial circumstances when considering an OIC in an effort to administratively resolve the amount due.

Taxpayers who want to avail themselves of the IRS Offer in Compromise program file a formal application, in which they propose to pay less than their total obligation amount (taxes, interest and any associated penalties). That much is straightforward. But as another adage goes: “the devil is in the details,” and that is where many taxpayers head in the wrong direction, and make an already challenging and stressful financial situation exponentially worse.

Here are the four biggest myths:

IRS Offer in Compromise Myth: Taxpayers only need to petition the Federal government to take advantage of the program.

The Facts: Many States have Offer In Compromise programs, and each has its own qualifying standards. Taxpayers who owe money to both the IRS and their respective State tax agency must coordinate the filings in order to facilitate a mutually acceptable resolution. Just dealing with the IRS is not enough, and the IRS is under no obligation (and will not) reach out to their State-level counterparts. The onus to do this is completely on each taxpayer.

IRS Offer in Compromise Myth: Filling out the proper forms is time consuming, but does not require expertise.

The Facts: The vast majority of taxpayers do not have requisite knowledge of the IRS collection process for their petition to be successful, regardless of how much time they allocate to their application. While the lists of common errors is long, among the most frequent are: overstating assets and income (and therefore offering the IRS too much); failing to submit the proper application fee and a deposit for the amount offered; and failing to include proper financial disclosure. And if you are still not convinced: the Federal government’s own figures show that 75 percent of applications are returned due to forms being filled out incorrectly, and of the 25 percent that are processed, approximately 50 percent are rejected.

IRS Offer in Compromise Myth: Third-party firms and consultants can help you settle your debt and enjoy a “big discount.”

The Facts: This is false advertising at its worst, since the consequences here can be life-altering. These firms and consultants have no idea what your tax situation is like, and therefore cannot even promise that the IRS will accept your petition, let alone allow you to enjoy a “big discount.” Only a qualified and experienced professional who has analyzed your specific financial details, and who knows the IRS rules and guidelines inside and out (including material that is not easily available to the public — or comprehensible even when it is) can determine your eligibility for an Offer In Compromise.

IRS Offer in Compromise Myth: If you owe money to the IRS, then you submit an application right away to stop collection action or interest while your case is being reviewed.

The Facts: Before the IRS will even consider your application, they will check to see where you are current with all filing requirements. If anything is overdue, or if you are in an open bankruptcy proceeding, then your application will be returned to you.

The Bottom Line

The IRS Offer in Compromise program has the potential to be substantially beneficial for qualifying taxpayers who (and this is the most critical part) complete and submit their application properly, completely and effectively. The IRS assesses applications on a case-by-case basis, and the more boxes you check, the more likely you are to be granted financial relief. Conversely, if you get trapped by any of the myths above — or dozens of others that endure — not only will your application be rejected and returned, but your debt will continue piling up by the day.

What Should You Do?

The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), Los Angeles and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. And if you are involved in cannabis, check out what a cannabis tax attorney can do for you. Additionally, if you are involved in crypto currency, check out what a Bitcoin Tax Attorney can do for you.

What You Need To Know If You Received IRS Notice LT16 To Prevent An IRS Levy.

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What You Need To Know If You Received IRS Notice LT16 To Prevent An IRS Levy.

Getting a notice in the mail from IRS usually causes much anxiety. After all the IRS has the power on its own to implement enforcement action which can include seizing your assets or wages. Enforcement action could also include the filing of a notice of federal tax lien, which could affect your credit score and ability to borrow.

What Is So Special About IRS Notice LT16?

Look for the code or letter type in the upper right corner on the first page of your IRS Notice. If it shows that this a Notice LT16, keep in mind that there is not an IRS agent likely assigned to your case. It actually is a notice generated automatically by the IRS computers. Any immediate levy action is determined by the success of the IRS computer in trying to find information about your income from any W2 and 1099 information that has been reported by third parties.  Alternatively, your case could be assigned to a Revenue Officer who could promptly commence with enforcement action. Revenue Officers are the highest level IRS collection agents, work in your locale, and often start a collection case investigation by making a visit to your home or office.

What you need to do to avoid enforcement action:

  • Read your notice carefully: Following the instructions on your notice may stop enforcement action.
  • File missing tax returns (if any): If your notice indicates you have missing tax returns, file the missing returns as soon as possible.
  • If you can pay the unpaid balance in full, make payment: Interest and applicable penalties will stop being added as soon as you pay your balance in full.
  • If you cannot pay the full amount due: Pay as much as you can now and set up an installment agreement for the remaining balance. You must be current on your filings in order to apply for an installment agreement.

If you already have an approved installment agreement, then continue making payments per that agreement. Payments on your balance can take up to 21 days to post on your account so if you paid your balance in full within the last 21 days, you should be able to disregard the LT16 you received.

If You Cannot Pay in Full Now

Paying what you can now will reduce the amount of interest and applicable penalties added to the remaining balance in the future; however, it will not stop the IRS from taking enforcement action unless a formal plan is put in place. It would be in your best interest to first meet with a tax attorney to determine whether there are any further benefits to pay selected IRS liabilities and/or making a down payment that will bring the total balance owed to a level that qualifies for any one of the special programs offered by the IRS.

If You Are Experiencing A Financial Hardship

In some circumstances you may qualify for a status with IRS of marking your account as “currently not collectible” thus temporarily delaying collection action until your financial condition improves. Putting your account in currently not collectible status does not stop penalties and interest from being charged and it does not mean the debt goes away; it means the IRS has determined you cannot afford to pay any of the debt at this time. Because at some point in the future the IRS could resurrect collection action, many taxpayers prefer to seek permanent relief. An Offer In Compromise allows you to settle your tax debt for less than the full amount you owe. This may be a legitimate option if you cannot pay your full tax liability, or doing so creates a financial hardship. It would be in your best interest to meet with a tax attorney to determine whether you qualify as the IRS makes it very difficult for taxpayers to successfully get approval of an Offer In Compromise.

Penalties And Interest

The IRS charges penalties on your account when you do not pay your tax in full by the return due date (usually April 15), or if you’ve not made sufficient estimated tax payments (if required). Interest on the total amount you owe generally begins being charged daily from the return due date. If you do not pay in full (even if you have a pending or approved installment agreement) by the payment due date specified in any notice issued to you, additional interest and applicable penalties will continue to be added until you pay your balance in full. You may qualify for relief from penalties if you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations, due to circumstances beyond your control. The IRS refers to this as having “reasonable cause”. It would be in your best interest to meet with a tax attorney to determine whether you qualify as the IRS makes it very difficult for taxpayers to successfully get abatement of penalties.

Your Appeal Rights

If the tax balance is in doubt, you dispute the amount of the tax, or cannot resolve a disagreement with the IRS, generally you are entitled to a hearing with the Office of Appeals. It is important that you take advantage of this option as your situation can then be evaluated by a Settlement Officer who is independent of IRS Collections. Knowing how to best present such cases in appeal, we have much success in reaching resolution with this Office. Since there is a short window to file an appeal (usually 30 days from the date of the Notice LT16), it would be in your best interest to meet with a tax attorney as soon as possible.

What Should You Do?

You should think of the IRS Notice LT16 as a heads-up that the IRS is getting ready to start collection enforcement and that during this period before that action starts you get proactive to come up with plan so it’s important to that you’ve hired the best lawyer for your particular situation. The tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), San Diego County (Carlsbad) and elsewhere in California are highly skilled in handling tax matters and can effectively represent at all levels with the IRS and State Tax Agencies including criminal tax investigations and attempted prosecutions, undisclosed foreign bank accounts and other foreign assets, and unreported foreign income. And if you are involved in cannabis, check out what a cannabis tax attorney can do for you.

Owe IRS? Make Sure You Don’t Pay More Than What You Owe

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The Consequences Of Violating The Five-year Probationary Term After Getting An Offer In Compromise

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The IRS offers a program called an Offer In Compromise (“OIC”). An OIC allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.

With a properly completed application for an Offer In Compromise and required financial disclosures, the IRS will consider your ability to pay, income, expenses and asset equity. Only when it can be shown that the amount offered represents the most the IRS can expect to collect within a reasonable period of time will the IRS approve an OIC.

What people do not realize is that if your OIC is accepted, you are subject to certain terms over the next five years that if any term is violated the IRS reserves the right to revoke your OIC and thus put you back to where you originally started subtracting the payments made under the OIC and adding the accrual of more penalties and interest to the current date.

So it is important that anyone with an accepted OIC be aware of these terms and follow compliance:

1. You must comply with all provisions of the internal revenue laws, including requirements to timely file tax returns and timely pay taxes for the five year period beginning with the date of acceptance of the OIC and ending through the fifth year, including any extensions to file and pay. This is what I refer to as the “Five-year Probationary Period”.

2. Youmust promptly pay any liabilities assessed after acceptance of the OIC for tax years ending prior to acceptance of the OIC that were not otherwise identified in your application for an OIC.

So if your OIC included the Form 1040 liability for 2015 and later after your OIC was accepted you got audited for 2015 and that audit resulted in a liability, you would need to promptly pay that liability or else face a revocation of your OIC.

Likewise, if your OIC covered only individual income taxes and you were later assessed with unpaid employment taxes of a business, the failure to pay those new liabilities could result in a revocation of the OIC.

If the OIC was being submitted for joint tax debt, and one of the taxpayer-applicants does not comply with future obligations, only the non-compliant taxpayer will be in default of the OIC. This situation could occur where husband and wife who filed joint income tax returns and jointly secured an OIC later gets divorced and one party defaults on the OIC terms listed above.

An accepted OIC will not be defaulted solely due to the assessment of an individual shared responsibility payment made against another liable taxpayer. This situation could occur where two business owners have personal liability for unpaid employment taxes of the business and one of the owners defaults on the OIC terms listed above.

Now if you find that you cannot keep up with any of these terms, early intervention by your tax counsel with the IRS may still prevent your OIC from getting revoked. Once you receive a final determination by IRS that your OIC is revoked, any new OIC that may now be submitted will be based on your then current financial situation which if it has since improved would lead to an even higher Offer amount with no credit for what was paid under the prior OIC.

Should your really believe those companies that advertise that they can settle your IRS debt for pennies on the dollar?

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Through my years in this profession, that is a commonly asked or thought-about question.

We call these companies “Offer Mills”.  These companies which have no track record or history come in and out rather quickly and are never associated with any individual willing to put his or her name to the company and what the company is supposed to be doing.  This is because these companies tend to make misleading statements and guarantees that they cannot meet.

Many times these companies will not even evaluate your full financial situation at all and tell you what you want to hear just so that can make a profit from you.  Also with these companies you do not know who you are dealing with or where they are at. Which is why after many consumers complain about a particular one of these companies (and post their complaints on the internet), that company will close down and open up another a new name just to make a fresh start but only to follow the same bad path.

The Law Offices Of Jeffrey B. Kahn, P.C. is a law firm specializing in resolving tax problems.  When we say that you are a great candidate for an Offer In Compromise, it is because we have done a thorough evaluation of your case first.  Call our office to make an appointment to meet with our principal tax attorney, Jeffrey B. Kahn, in any of our Los Angeles offices or elsewhere in California who is board certified in tax and fully evaluates your case to determine the best viable option to resolve your tax problems.

Description: The Law Offices Of Jeffrey B. Kahn, P.C. has helped many people avoid collection action by the IRS and State tax agencies. Working with a tax attorney in Los Angeles or elsewhere in California is the best bet for reducing or eliminating the amount you owe.

Taxpayer Scores $862,000 from IRS after Tripping over a Phone Cord

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A taxpayer who met with a Revenue Officer at an Internal Revenue Service office on Long Island successfully sued the IRS for $862,000 after he was injured by tripping over a phone cord.

William Berroyer claimed in his lawsuit that he could no longer play golf or have intimate relations with his wife more than once a month after he fell during a 2008 conference with a Revenue Officer at an IRS office in Hauppauge, NY, according to the New York Post. He had visited the IRS to work out a payment agreement for a $60,000 tax bill when he tripped on the phone cord and fell against a cabinet.
After leaving the IRS, he telephoned the IRS Revenue Officer from the parking lot to inform him that he had lost the sense of feeling in his leg and was suffering from shoulder pain. He then spent 17 days in hospitals and rehabilitation centers recovering from his injury.

In his lawsuit he claimed $10 million in damages.  Attorneys for the IRS claimed he was exaggerating his injury, but the judge ultimately awarded him $862,000 for pain and suffering. And the big prize is because this was for pain and suffering, he won’t have to pay taxes on the damages!

So now that the IRS has tucked away all their telephone cords, how can taxpayers who owe the IRS avoid collection action?

  1. Offer In Compromise. This is a formal application to the IRS requesting that it accept less than full payment for what you owe in taxes, interest, and penalties. An offer in compromise may allow you to settle back taxes or IRS liability at a substantial discount on the basis of doubt as to collectability, liability, or effective tax administration. In addition, while your offer is under consideration, the Internal Revenue Service is prohibited from instituting any levies of your assets and wages. Most people do not have the necessary skills or knowledge of the IRS collection process to make an offer in compromise that is in their best interest and can be processed by the IRS. Government figures show that 75% of offers are returned at the beginning due to forms being filled out incorrectly, and of the 25% that are processed, approximately 50% are rejected.
  1. Installment Agreement. Allows you to pay IRS debt in full in smaller, more manageable amounts, usually in equal monthly payments. The amount of your installment payment will be based on the amount you owe and your ability to pay that amount within the time available to the IRS to collect tax debt from you.  However, be aware that because you are financing your liability with IRS, interest and penalties will continue to accrue.  Most installment agreements are set up with level monthly payments but there are also different types and terms of installment agreements which if you qualify may be more suitable for you.  The variations are not publicly offered by IRS – only a seasoned tax attorney would know to ask for them.
  1. Uncollectible Status.  Occurs when the IRS has determined that they are presently unable to collect the taxes from the taxpayer by full payment, through an Installment Agreement or by way of an Offer in Compromise.  Once the account is placed on a Currently Uncollectible (“CNC”) status, the IRS does not pursue collection activity against the taxpayer and the statute of limitations on the tax liabilities will continue to run. Generally, unless the taxpayer’s financial situation changes, the account will remain on a CNC status until the tax liabilities expire. However, if the taxpayer’s financial situation improves the account will be taken off of CNC status so that the IRS can collect the taxes through full payment or an Installment Agreement. CNC although temporary could provide interim relief to taxpayers who all of a sudden run into financial hardship.

A consultation with the Law Offices Of Jeffrey B. Kahn, P.C. can help you determine what the best strategy is for you.

Description: The Law Offices Of Jeffrey B. Kahn, P.C. has helped many people avoid collection action by the IRS and State tax agencies. Working with a tax attorney in Los Angeles is the best bet for reducing or eliminating the amount you owe.

Using an Offer in Compromise to Avoid a Tax Lien

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Working with a tax lawyer in Los Angeles to reach an Offer in Compromise with the IRS is an effective tool for reducing the amount you owe in federal taxes. It can save you from dire consequences such as a lien against your property or having your wages garnished. If you are seeking an Offer in Compromise to reduce your debt and avoid a tax lien, the Law Offices Of Jeffrey B. Kahn, P.C. wants to let you know some variables that the IRS will consider when evaluating your case:

Health: If you have recurring health issues that are keeping you from earning a steady paycheck. The IRS might consider this as a factor in reducing or even eliminating the amount you owe in taxes. This may also happen if you are caring for a seriously ill dependent.

Age: People who are nearing or past retirement age will have less prospects for earning money in the future; this will mean that a tax relief attorney can sometimes successfully argue for the IRS to collect a smaller amount upfront to settle the debt since there is no guarantee of long-term future payments.

Amount of Offer: Working with a tax attorney can help you to greatly reduce the amount of your tax debt whereby you can settle for “pennies on the dollar”.  Because every potential Offer In Compromise is different, an offer amount that would be suitable for one taxpayer may not be high enough for another taxpayer.  That is where professional guidance from the tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. comes in handy as we can set the balance between paying the lowest amount possible to the IRS with providing an Offer that the IRS would be interested in accepting — even though it’s for a small percentage of the total amount owed.

IRS Increases Application Fee For Offer In Compromise

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Effective April 27, 2020, the application fee charged by IRS to apply for an Offer In Compromise has been increased from $186.00 to $205.00.

Established by the Internal Revenue Service, the Offer in Compromise Program is a formal application to the IRS requesting that it accept less than full payment for what you owe in taxes, interest, and penalties.

An offer in compromise may allow you to settle back taxes or IRS liability at a substantial discount on the basis of doubt as to collectability, liability, or effective tax administration. In addition, while your offer is under consideration, the Internal Revenue Service is prohibited from instituting any levies of your assets and wages.

Most people do not have the necessary skills or knowledge of the IRS collection process to make an offer in compromise that is in their best interest and can be processed by the IRS. Government figures show that 75% of offers are returned at the beginning due to forms being filled out incorrectly, and of the 25% that are processed, approximately 50% are rejected.

The tax attorneys of the Law Offices Of Jeffrey B. Kahn, P.C. have extensive experience with getting Offers processed by the IRS for the lowest possible amount and secure a final acceptance with IRS.