May 2012 Changes To IRS Offer In Compromise | Tax Debt Settlement | IRS Tax Settlement | IRS Compromise | IRS Offer | Cannot Pay Taxes | Insight Law Firm May 31, 2012Posted by Insight Law Firm in Income Tax, IRS, Tax.
Tags: Cannot Pay Taxes, IRS Compromise, IRS Offer, IRS Settlements, IRS Tax Settlement Attorney, Offer in Compromise Lawyer, Tax Debt Settlement
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In May 2012, the IRS published new guidelines for taxpayers interested in pursuing an offer in compromise to settle outstanding tax liabilities. An offer in compromise is an agreement between a taxpayer and the IRS under which the IRS accepts a lesser amount of money than what is owed to satisfy past tax debts.
Under the new guidelines, an offer in compromise is likely to become a more attractive option for many taxpayers unable to pay outstanding liabilities. Two particularly noteworthy changes include new formulas to calculate future income and expenses:
- Future income will be calculated for 12 or 24 months instead of 48 months or 60 months. Previously, the IRS assessed its collection potential by calculating the future income of taxpayers over a period of four years for offers that were paid in five months or less and five years for any other offers. Now, the IRS will consider taxpayers’ income only for a one year period for offers paid in five months or less and two years for any other offers.
- Student loans and minimum credit card payments may be calculated as a miscellaneous expense. The IRS has also changed the parameters of the miscellaneous expenses taxpayers can claim when proposing an offer. The expenses claimed by taxpayers in an offer in compromise are evaluated against national expense standards for those basic living expenses. Now, taxpayers can include new expenses, including bank fees, bank charges, credit card payments, and student loan payments within the miscellaneous expense category.
Washington taxpayers interested in learning how these changes may affect their ability to settle their outstanding tax liabilities with an offer in compromise can call Insight Law for a free consultation at (206) 397-4780, or visit our website link below to speak with a tax attorney.
Author: Amanda Stach
Tags: Cannot Pay Taxes, IRS Compromise, IRS Settlements, IRS Tax Debt Relief, IRS Tax Debt Settlement, IRS Tax Help, Offer in Compromise, Tax Debt Settlement Attorney, Tax Debt Settlement Lawyer
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For more information on offers in compromise or to discuss whether an offer in compromise might help you, consult a local tax attorney. Insight Law offers Washington taxpayers a complimentary consultation when they call (206) 397-4780, or click the Tax Attorney link below to visit our website.
Currently Not Collectible – Vinatieri v. Commissioner: TAXPAYER FACING ECONOMIC HARDSHIP MAY STOP IRS LEVY DESPITE UNFILED RETURNS May 13, 2012Posted by Insight Law Firm in Income Tax, IRS, Tax.
Tags: Cannot Pay Taxes, Currently Not Collectible, low income taxpayer, non-collectible status
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The IRS possesses authority to levy the personal wages and property of taxpayers owing past taxes, interest, or penalties. However, when a taxpayer in poor financial condition can establish that the IRS’ levy creates an economic hardship, the IRS must release part or all if its levy and utilize collection alternatives. These alternatives might include preparing an installment agreement for the taxpayer, accepting an offer-in-compromise, or granting the account status as currently not collectible.
The dispute in Viatieri arose when the IRS proceeded with a levy against a taxpayer owning only $14 in cash and a $300 car she depended on to get to work and earning only $800 a month, which was consumed by the $800 a month she spent on basic living expenses for herself and her daughter. The IRS argued that the taxpayer was not eligible for relief, because she had failed to file tax returns in two prior years. The U.S. Tax Court disagreed, concluding the IRS cannot proceed with a levy that would create an economic hardship for an individual. Instead, the IRS should consider a collection alternative.
Viatieri does not otherwise change the requirements for relief. To qualify for these collection alternatives, a taxpayer still must establish the levy would pose an economic hardship by providing accurate and complete financial information to support his or her arguments. Taxpayers unsure of their eligibility for collective alternatives or who seek assistance in establishing economic hardship to the IRS should seek the assistance of a local tax attorney.
133 T.C. 16 (2009)
If you need to contact a Tax Attorney in the Seattle Area, call (206)397-4780, or click the Tax Lawyer link below to visit our website.
Author: Amanda Stach