Nothing on this earth is scarier than owing money to the Federal Government. This is because of the fact that the IRS will stop at nothing to collect the taxes that are owed. They are the largest and most powerful collection agency in the United States with the full power of the Federal Government behind them. It is not a good idea to fail to file your tax returns, owe unpaid back taxes, this could result in you having to settle your Tax Debt using an IRS Offer in Compromise.
How to qualify for an Offer in Compromise
Not everyone will actually qualify to receive an OIC (Offer in Compromise) from the IRS and just because you filled out the form does not automatically qualify you for Settling a Tax Debt using an IRS Offer in Compromise. There are four preconditions that you must complete before you proceed on to The following are the four steps you must complete in order to move forward
#1 You must be current on filling all past tax returns that you are required to file by law
#2 You have to have had received at least one tax bill from the IRS previously
#3 You must be current on any estimated tax bill payments
#4 If you are business you must be current on all quarterly tax payments
When it comes to Settling a Tax Debt using an IRS Offer in Compromise, the IRS is only willing to make this kind of deal if they are reasonably certain that they are going to collect the most of the tax debt that is owed.
Whether you are an individual with a tax debt problem or a business, you cannot avoid paying your taxes. As a US taxpayer, your income is reported to the IRS by your employer and as a business owner, you are required to submit income reports at regular intervals. So, when tax time comes around the IRS simply waits for you to submit your tax return and they do their calculations and you either get money back or you will be expected to pay the difference at the time you file your return.
When things go terribly wrong – unpaid taxes and settling with offer in compromise
In the United States taxes are withheld from all workers that are being paid to do work at a business. There are also people who are self-employed and they are required to either estimate the amount that they owe and pay the IRS directly or they claim their income at the end of the year and the IRS tells them how much they are needing to pay.
Each tax year starts on January 1st and ends on December 31st, however, the IRS gives you a grace period in which to file your taxes and depending on how the days fall, April 15th is the day that all tax returns must be filed and any money owed needs to accompany the return.
Unfortunately, we do not live in a Utopian society which means bad things do happen to good people and if something unexpected makes it difficult to file on time. You can find yourself on the wrong side of a face to face interview with an IRS officer or agent. If you end up receiving a letter of the IRS stating their intentions of collecting a back tax debt, notice of levy, or lien, absolutely do not fail to respond to the letter. You have options to get a payment plan, or lump sum offer in compromise.
The IRS offers ways of settling unpaid tax debts
While the IRS does have an extremely bad reputation for using many different tactics for collecting overdue tax dollars owed. The IRS has a virtual army of revenue officers and other personnel who are trained for the sole purpose of making sure that the Federal Government gets every dime that it is owed to it by United States taxpayers.
One of the best ways that the IRS has to collect the money owed is by auditing a certain number of tax returns in order to ensure that the Federal Government gets every dime that it is owed. If you are one of the unlucky ones to owe the IRS tax debt and you cannot afford to pay how much they are asking in order to settle the debt, you could be in serious trouble. You have options to get a payment plan, or lump sum offer in compromise.
Fortunately, the US Tax Code has a number of systems in place that makes it possible for any taxpayer owing any amount of money can reduce that amount. One of those systems allows for the settling a tax debt using an IRS Offer in Compromise. By submitting a Form 433A/B-OIC along with 656-OIC you let the IRS know that you intend working out a plan with them that ensures that you are able to securely pay back the tax debt you owe.
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