Tax Trouble Frequently Asked Questions | Tax Group Center

Welcome to Tax Group Centers Frequently Asked Questions area. We specialize in providing affordable solutions to businesses and individuals alike who find themselves in trouble with the IRS or State Taxing Authorities.

How is the amount of the offer calculated in an Offer in Compromise?

The IRS uses a two-part formula to determine the amount in an Offer in Compromise (OIC). The first portion uses the equity in assets you own. The second multiplies the income you have available each month after paying all allowable expenses by a factor of 48 or 60. As is clear from the equation, living expenses ultimately determine the outcome of many Offer in Compromise requests. The IRS will dig a bit deeper past the “standard” formula if it looks like you’re going to qualify for an Offer in Compromise. The big thing to know if you’re wondering how to get an Offer in Compromise approved is that the IRS will look at your declared expenses to see if they are what the agency would consider to be “reasonable” based on average living standards.

The IRS is even going to take a long view when evaluating how “reasonable” your expenses look. The IRS typically takes a five-year glance into the future to spot any expenses that will fall off during the lifespan of your OIC term. This often includes things like final payments on car loans. A taxpayer will need to be prepared to counter the claim that new funds will be freed up that can be used to pay down tax debt in the future. It’s not typically possible to qualify for an IRS Offer in Compromise if the numbers work out so that you have more assets than the balance due. While there are exceptions, the writing on the wall for most people is that an IRS OIC probably isn’t going to happen if you have more cash than you owe.

After we settle, will I be in good standing with the IRS/State?

Yes. For the next five years, however, you must remain in compliance with the tax laws. This means you must file and pay all subsequent tax returns in a timely manner. You must also make timely estimated tax payments if required.

Is the IRS/State required to give me a payment plan?

Yes, you have a legal right to an IRS payment plan if you have a tax debt of $10,000 or less that can be paid back within five years. The IRS also provides a streamlined installment agreement that’s activated if the total you owe in tax, penalties, and interest adds up to less than $25,000. The stipulation with this particular type of IRS installment plan is that you must also be able to repay what is owed within five years. While there is no legal right to a streamlined IRS installment agreement payment if you owe up to $25,000, an IRS policy makes the option available. The answer is less static when it comes to state taxing authorities around the country. Policies for tax repayment can differ from state to state. Securing a payment plan in any case should be done with a low fixed fee.

How long does it take to negotiate a settlement with the IRS/State?

The first thing to know is that settlement periods vary by case. Most people can expect to settle within about seven months. The first step is to gather all evidence necessary for your case. This includes organizing financials for an Offer in Compromise (OIC) or building the narrative for penalty abatement. Realistically, the case-building process takes about one month.

Next is the review process. Applicants can expect to wait between three and four months once all paperwork has been submitted to the IRS or state body. There is also the potential that an appeal will be needed if an offer is rejected. The process to appeal a judgment typically takes two months. Your ability to be prompt, thorough, and forthcoming while submitting any forms and financials required will help to make the settlement process as quick as possible.

What can I do about the tax liens?

There are a few different options when a tax lien is involved. The debtor could simply pay the debt in full to get the situation erased as quickly as possible. It is often possible to take care of this using a direct negotiation with the IRS or state taxing body. Alternatively, a debtor may have no choice other than to explore bankruptcy options.

It is possible that court action may be necessary to determine the value of the collateral for the purpose of determining the amount of equity that will be attached to a lien. However, a lien isn’t always a done deal. It is sometimes possible to challenge the validity of a lien on certain grounds. Here’s a rundown of some factors that could negate a lien:

  • It turns out the notice of tax lien was never recorded.
  • The notice of lien was only recorded after the automatic stay took effect.
  • A lien was filed against assets that do not actually belong to the debtor.
  • A tax lien was based on an invalid assessment.
  • A lien expired past its 10-year statute without being rerecorded.

What is a federal tax lien capable of taking from you? The IRS is permitted to levy, seize, and sell any property that you own or have a stake in if a lien goes through. Seeking IRS tax lien help is important if any of the negating factors above could apply to your case. Your assets and property could be saved if you’re able to utilize a lien help center to prove that the IRS or state taxing body does not have a right to seize your assets or property.

What if I can't pay all my back taxes at once?

Most people can’t. This is, after all, why most of our clients are in the position they’re in. It is our function to lower the amount of taxes owed and work out an affordable monthly payment, while at the same time protecting your assets.

What are my options if I can't reach an agreement with the IRS/State?

The IRS’s priority is to get paid. This is why the IRS is often so willing to reach a settlement with a delinquent taxpayer. The same is often true when it comes to individual state taxing authorities. As a result, simply expressing a willingness to pay back what you owe is often enough to reach an agreement that keeps some of the worst IRS penalties at bay.

One of the big reasons for being refused an IRS installment agreement is a failure to be current with tax filings. Unfiled taxes can prevent the IRS from granting you an IRS payment plan. Simply filing late taxes before submitting an application for a new installment agreement is often enough to be approved. The goal of the IRS is always going to be getting you into compliance to allow for as much money to be collected as quickly as possible. Getting into compliance and making sure that all outstanding factors that could be preventing your eligibility are settled will be important if you’re at a standstill with negotiations.

What can I do about all the penalties and interest?

The IRS tacks on fees for failure to file, failure to pay, failure to pay proper estimated tax, and dishonored checks. Unfortunately, IRS penalty and interest rates really add fuel to the fire when you’re already having trouble coming up with the funds to cover the tax amount owed. Penalty abatement could be on the table if IRS penalties and fees are piling up on your account. The IRS may grant abatement if it can be proven that extenuating circumstances were responsible for the tax debt that has accumulated. This often includes natural disasters, fires, death, serious illness, or other factors that made it impossible to fulfill your tax obligations. IRS penalties and interest can sometimes be cleared when you enter into IRS-approved payment plans or seek relief options.

What do your services cost?

Our services vary in cost depending on the amount of work entailed in the case, type of resolution and whether or not you are in the collections process. Our initial consultation is free, and we won’t take on your case unless we’re confident we can reach a resolution you’ll be happy with.

Why can't I just deal with the IRS/State myself?

Attempting to resolve your tax issues on your own is possible. However, getting in over your head during this very difficult process is almost a given. Taxpayers are forced to play by the IRS’s rules using the IRS’s language. The average taxpayer simply isn’t aware of the tax relief solutions that are available for IRS tax problems.

More than 85 percent of all offers are rejected by the IRS due to the fact that the applicant simply doesn’t understand the process. What’s more, complicated forms and long hold times while waiting to speak with an agent can sink the process before you even get started. The professionals at the Tax Group Center can put our decades of experience at handling a variety of tax issues to work for you. We’ll work hard to maximize your chances of getting the relief you need the first time you apply. Our tax resolution services are here for both individuals and businesses facing a variety of IRS tax problems and tax debt problems.

How to File a Tax Extension: State and Federal Help

Filing the IRS Form 4868 instead of your standard tax return on or before the April deadline will extend your due date to Oct. 15 of the same year.

Is Not Filing a Tax Return Illegal?

Yes, failing to file during any year that you are required to do so is illegal.

What Are the Penalties for Unfiled Tax Returns?

You will immediately face the failure-to-file penalty totaling 5 percent of the balance for every month that your return remains unfiled. This penalty maxes out at 25 percent. Filing at least 60 days late puts you at a minimum penalty of either $205 or 100 percent of owed taxes.

I Lost My W2. How Do I Recover It?

The first step is to ask your employer for a copy. Once that avenue has been exhausted, you can contact the IRS.

How to File Bankruptcy on Taxes

You may be able to discharge debts for federal income taxes using Chapter 7 bankruptcy if certain conditions are met.

Does Bankruptcy Clear Tax Debt?

Bankruptcy can clear tax debt in certain cases. However, only income taxes can be wiped clean. Payroll taxes and fraud penalties cannot be eliminated in bankruptcy.

What Are the Requirements for Tax Discharge?

Tax discharge may occur if a return was due at least three years prior, a return was filed at least two years ago, taxes were assessed at least 240 days ago, and no fraud was involved.

What States Do You Work In?

At Tax Group Center, we’re able to provide services to taxpayers in all 50 states.

How Do I Stop the IRS From Levying My Bank Account or Garnishing My Wages?

It will be necessary to explore your options for negotiating with the IRS, setting up an installment agreement, or paying less than you owe to stop a wage garnishment. It may be necessary to declare hardship to preserve your assets and paychecks.

Why Do I Need a Resolution Tax Practitioner If I Have a CPA?

CPAs are useful for preparing taxes. However, a tax resolution practitioner is familiar with the tax relief options that can help you to avoid penalties and escalation when you’re facing a tax problem. The Tax Group Center team actually includes both IRS specialists and CPAs.

Have a different question? Contact us today – tax professionals are standing by to help you resolve your tax situation, NOW!

Have a different question? Contact us today – tax professionals are standing by to help you resolve your tax situation, NOW