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Florida Tax Relief Opportunities: Offer in Compromise

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Owing taxes to the IRS can be a stressful and financially devastating experience. Consequences can range from wage garnishment and additional monetary penalties to repossession of personal items and even jail time. Fortunately, there are options, such as the offer in compromise program, that are available to help eligible parties who are in debt to the IRS. Determining whether you qualify for tax relief can be difficult, so if you, or a loved one, are struggling with tax debt, it is important to obtain the advice of an experienced tax attorney who can help explain your legal options.

Eligibility

The offer in compromise program enables certain individuals to settle their tax debt for less than the full amount owed when one of the two following circumstances exists:

  • The debtor has insufficient assets and income to pay the full amount of the tax debt; or
  • The debtor has sufficient funds to pay the full amount, but exceptional circumstances would cause him or her to undergo unfair or inequitable economic hardship if the full amount were paid.

Not everyone qualifies for this program and the IRS takes into consideration the individual facts and circumstances of each case when making a determination, including each applicant’s:

  • Ability to pay;
  • Income;
  • Expenses; and
  • Asset equity.

To be eligible for consideration the taxpayer must satisfy the following additional requirements, including that he or she:

  • Filed all legally required tax returns;
  • Has received a bill for at least one tax debt;
  • Has made all required estimated tax payments for the year; and
  • Has made all required federal tax deposits if he or she owns a business.

The applicant must also include an offer to settle the debt for a certain amount, to be paid in either:

  • A lump sum, which requires the applicant to include 20 percent of the total with the offer and pay the remaining balance in five or fewer payments within five months of the date of acceptance; or
  • A periodic payment, which requires the applicant to include the first payment with the offer and pay the remaining balance within six to 24 months.

Offer Requirements

The amount that applicants should offer depends on a series of factors, but generally the IRS guidelines indicate that each offer should be equal to the total realizable value of the applicant’s assets combined with funds from future income. If an offer is too low to be accepted, the IRS will send a letter stating an acceptable offer based on the information provided by the applicant. If the applicant agrees with the new amount, he or she can re-submit the offer. Some applicants have the option of appealing a rejection as long as it is submitted within a month of the rejection letter’s date.

Tax relief opportunities, such as the offer in compromise program can help eligible applicants get back on their feet. However, acceptance is rare and fees and interest will continue to accrue while the application is pending, so it is important that applicants be confident in their offer before applying. If you live in the Daytona Beach, Orlando, Miami, or Jacksonville areas and you believe that you may qualify for a tax relief program, please contact Ronald Cutler, P.A. and a member of our dedicated legal team will help you schedule a consultation with an experienced tax attorney.