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Insight Law Firm | South King County Tax Attorney Blog | Renton Tax Attorney | Kent Tax Attorney | Auburn Tax Attorney | Maple Valley Tax Attorney | Covington Tax Attorney | Bonney Lake Tax Attorney | wa | IRS June 9, 2012

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Insight Law – Kent, Auburn, Maple Valley And Renton Tax Attorney

Dedicated  Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing.

Click “Home” To Read Our Blog. Click “About” To Learn More About Our Firm. Click the Tax Attorney link below to visit our firm website.

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Insight Law – South King County Location:

15111 8th Ave Suite 302
Burien, WA 98166

(206)466-5300

Bellevue Location:

800 Bellevue Way NE Suite 400
Bellevue, WA. 98004
 
( 425)462-6390

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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, 2012

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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.

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Offer In Compromise | IRS Settlement | How Does it Work? | Insight Law Firm May 13, 2012

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For some taxpayers facing IRS collection activities, an offer in compromise presents an opportunity to stop collection actions like wage garnishments and negotiate a final resolution to outstanding tax debts.
 
What is an offer in compromise?
 
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 an outstanding tax liability.  The IRS may accept offers in three circumstances: (1) there is genuine doubt as to whether the IRS correctly determined the amount of tax due; (2) there is doubt that the amount due is collectible in light of the taxpayer’s income and assets; and (3) requiring full payment of the tax liability would create an economic hardship or be unfair and inequitable in light of some type of exceptional circumstance.  OICs based on the second scenario–doubt as to the amount being collectible–are most common and are therefore the focus of the subsequent questions and answers.
 
How will the IRS determine whether I qualify for an offer in compromise? 
 
You may request an offer in compromise through Form 656.  To qualify for an offer in compromise, a taxpayer must generally demonstrate he/she is unable to fully pay the amount of his/her liability.  The taxpayer must then propose terms of an offer under which the IRS will receive at least the amount it could reasonably expect to collect from the taxpayer by pursuing collection opportunities. 
 
The IRS will consider your income, basic and necessary living expenses you incur each month, money you have in your accounts, and the equity you have in cars, homes, and other assets in determining your ability to pay the tax debts and its ability to collect from you.  You must disclose all of this information to apply for an offer on Form 433-A. 
 
How much of my tax liability will I pay under an offer in compromise?
 
The answer to this question will differ greatly from taxpayer to taxpayer.  Some taxpayers may have offers accepted under which they pay very little of their underlying tax liabilities; other taxpayers may pay close to the full amounts of their liabilities.  Your outcome is dependent on the specific facts of your case. 
 
Your monthly expenses for living expenses like food, clothing, housing, utilities, transportation, and medical care will be measured against local and national standards.  Leftover income after these expense allowances is then multiplied by a set period of time, and this amount becomes part of the total offered to the IRS to settle the debt.  You will also be expected to contribute the “quick sale value” of equity you hold in your car, home, or other assets to the amount of the offer, which is generally around 80% of the item’s value.
 
What do I need to apply for an offer in compromise?
 
Along with the offer forms detailing your income, expenses, and assets, you must submit an application fee and an initial offer payment.  Depending on the terms of the offer you propose, this initial payment is either 20 percent of your offer amount or the first of several, smaller monthly installments you may make while your offer is under consideration.  Low-income individuals may qualify for a waiver of the application fee and the first payment requirements.  The payments can be made over five months, or up to 24 months.
 
Can an offer in compromise be changed or rejected after the IRS agrees?
 
Yes.  The IRS can change or even suspend its agreement with you if you fail to follow a set of conditions.  This includes making agreed payments, continuing to file returns and pay taxes for following years, and permitting the IRS to keep any refunds for the period of time around the offer’s acceptance.
 

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.

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Insight Law Firm | North King County Tax Attorney Blog | Lynnwood Tax Attorney | Shoreline Tax Attorney | Edmonds Tax Attorney | Mountlake Terrace Tax Attorney | Mercer Island Tax Attorney | Northgate Tax Attorney | wa | IRS May 13, 2012

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Insight Law – Lynnwood, Edmonds, Shoreline and Mukilteo Tax Attorney

Dedicated King And Snohomish County Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing.

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Insight Law – Seattle Location:

Insight Law Firm | Eastside Tax Attorney Blog | Kirkland Tax Attorney | Redmond Tax Attorney | Bothell Tax Attorney | Sammamish Tax Attorney | Issaquah Tax Attorney | North Bend Tax Attorney | Fairwood Tax Attorney | wa | IRS May 13, 2012

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Insight Law – Kirkland, Issaquah, Bothell, And Redmond Tax Attorney

Dedicated and Experienced King And Snohomish Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing.

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Insight Law – Bellevue Location:

 800 Bellevue Way NE Suite 400
Bellevue, WA. 98004

(425)462-6390

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Insight Law Firm | Snohomish County Tax Attorney Blog | Lake Stevens Tax Attorney | Mill Creek Tax Attorney | Stanwood Tax Attorney | Snohomish Tax Attorney | Marysville Tax Attorney | Arlington Tax Attorney | Granite Falls Tax Attorney | wa | IRS May 13, 2012

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Insight Law – Mill Creek, Lake Stevens, Marysville, and Snohomish Tax Attorney

Dedicated King And Snohomish County Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing.

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Insight Law – Everett Location:

Insight Law Firm | Washington State Business Tax Attorney Blog | Yakima Tax Attorney | Spokane Tax Attorney | Vancouver Tax Attorney | Wenatchee Tax Attorney | Tri Cities Tax Attorney | Ellensburg Tax Attorney | WA | IRS May 12, 2012

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Insight Law – Spokane, Vancouver, Yakima, And Washington State Tax Attorney

Dedicated King And Snohomish County Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing. (877)343-4358

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Insight Law Firm | Puget Sound Tax Attorney Blog | Bremerton Tax Attorney | Vashon Island Tax Attorney | Bainbridge Island Tax Attorney | Whidbey Island Tax Attorney | Gig Harbor Tax Attorney | Port Orchard Tax Attorney | Port Angeles Tax Attorney | WA | IRS May 12, 2012

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Insight Law – Bainbridge, Vashon, Bremerton, And Gig Harbor Tax Attorney

Dedicated King And Snohomish County Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing. (877)343-4358

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Insight Law Firm | Tacoma Tax Attorney Blog | Corporate & Business Tax Lawyer Tacoma WA | IRS | DOR | Audit | Levy | Lien | Garnishment May 12, 2012

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Insight Law – Tacoma Tax Attorneys

Dedicated Seattle And Tacoma Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing. (877)343-4358

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Insight Law Firm | Southwest King County Tax Attorney Blog | Federal Way Tax Attorney | Des Moines Tax Attorney | Burien Tax Attorney | West Seattle Tax Attorney | Seatac Tax Attorney | Tukwila Tax Attorney | wa | IRS May 12, 2012

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Insight Law – Tukwila, Des Moines, Seatac & Federal Way Tax Attorney

Dedicated South King County Tax Law Attorney Firm Representing Businesses And Individuals Throughout Washington State. We provide top quality service and client centric communication for a great value.  Four Locations For Your convenience. Call Today For a Free Consultation. If we cannot effectively resolve your tax issue, you will owe us nothing.

Click “Home” To Read Our Blog. Click “About” To Learn More About Our Firm. Click the Tax Attorney link below to visit our website.

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Insight Law – South King County Location:

15111 8th Ave Suite 302
Burien, WA 98166

(206)466-5300

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