Orange County Accountant

Taking on IRS tax debt is a daunting task that presents many confusing issues. The majority of taxpayers are aware of the option to pay their IRS tax debt in full or pay the tax debt in monthly payments or installments. But there is another option, the IRS “Offer in Compromise.” Knowing the steps to success with an IRS Offer in Compromise, also commonly called IRS tax settlement is important, because if your offer is approved you can save thousands of dollars! It can play a critical role in the financial future of any delinquent taxpayer, impacting not only the taxpayer individually, but the financial health and welfare of their family’s future. Settling Your IRS Tax Debt: In a nutshell, an “Offer in Compromise” is an IRS tax settlement. If you qualify for an offer, you can have your IRS tax debt greatly reduced. However, it’s not easy to qualify for an offer. The IRS will weigh your entire financial situation. If the IRS determines you don’t have enough income to satisfy your debt in full, your offer may be approved. It is your job to prove you can’t pay your IRS tax debt in full, so make sure you do your IRS research thoroughly. Insider Tip: It’s notoriously hard to have your IRS tax settlement approved, regardless of “how simply or straight forward it may sound.” But there is a secret way to crack the IRS’s code. The IRS has three ways of determining if you qualify for an Offer in Compromise/IRS tax settlement. The Factors: The IRS may accept the offer based on any of the following:> Doubt as to Collectability: If you know you cannot pay your IRS tax debt in full, you may qualify. Remember, if you have assets that could be sold to satisfy your debt these must be considered when you make your offer to the IRS. > Doubt as to Liability: If you think the debt liability does not fall to you, you’re a good candidate for an offer in compromise. But your reasons must be legitimate. Here are three legitimate reasons listed on the official IRS website:(1) the examiner made a mistake interpreting the law(2) the examiner failed to consider the taxpayer’s evidence or(3) the taxpayer has new evidence. IRS Tax Specialists: Expert IRS tax advisors may give you the edge you need to get your IRS tax settlement approved. Even with some insider knowledge, getting your Offer in Compromise approved by the IRS is difficult to achieve. That’s where IRS tax specialists come in. Tax specialists employ or include Tax Attorneys and Enrolled Agents. IRS tax specialists are experienced in all tax debt issues and know exactly what you qualify for, and how to help you get your Offer approved. They can make the difference in achieving an accepted offer. It’s Just The Start of Your Road to Recovery: Getting your offer in compromise approved is only the beginning of your road to recovery. When your tax debt settlement is approved you are entering a 5 year contract with the IRS. This “contract” means you have to file your taxes on time for five consecutive years. If you default on a payment or fail to file properly and timely, the IRS can charge you the original tax debt amount plus penalties and interest.

If IRS collection notices are ignored, the IRS is forced to collect from taxpayers by force. They do this with their dreaded IRS levy. By law, the IRS has the right to levy bank accounts (IRS bank levy), garnish your paychecks (IRS wage levy), or even seize your assets. But you do not have to let the IRS bully you or your family. There are ways to stop an IRS levy. The first step is to know the enemy.

IRS Bank Levy- The IRS bank levy is an extremely harmful way to collect tax debt. All of the money you scrimped and saved for can be gone in an instant. First, the IRS freezes your bank account. Then they give you 21 days to contact them and make some sort of payment arrangement. If you do not comply, the IRS will keep all of the money in your account permanently. If you received a Notice of Intent to Levy from the IRS, it’s imperative to act fast and get your tax debt taken care of. The freeze on your account from the IRS bank levy will cause issued checks to bounce, bank fees to be incurred, and will give you no access to pay your current obligations from your account. At this point, it’s a very wise idea to consider professional tax help for your IRS bank levy. A tax debt professional has a better chance of negotiating with the IRS to have an IRS bank levy removed in the short 21 day time limit. The IRS bank levy is an urgent issue meriting your full and immediate attention.

IRS Wage Levy – The IRS wage levy is another weapon in the IRS arsenal which is used to collect back tax debt. It’s also known as wage garnishment. The IRS can take a percentage of your paycheck until your tax debt is paid, or until the statute of limitations on your tax debt expires. Your employer is required by law to proceed with the IRS wage levy once the Notice to Withhold has been received from the IRS. They must use a mandated formula to determine “how much of your paycheck is to be garnished and sent directly to the IRS”. It is not unusual for a delinquent taxpayer to be left with 20%-25% of their “net paycheck” to live on, which obviously will not cover even basic living expenses. But there is help for this type of tax levy. There are two ways to stop an IRS wage levy. You can settle your tax debt and have it paid off, or you can have your account changed to a hardship or “Currently not Collectible” disposition. Because of the rapid financial damage that can be caused by an IRS wage levy, it is advisable to seek professional tax help.

Settling Tax Debt to Stop IRS Bank and Wage Levies – Settling your IRS tax debt is the fastest solution for stopping an IRS bank levy or an IRS wage levy. Once you are in the negotiation phase, the IRS levy will automatically stop. If your IRS settlement is approved, the IRS levy will actually be permanently “lifted” giving you complete relief from the tax debt problem!

Hiring Professional IRS Levy Help – It can be very hard to have your IRS tax debt settled when you fight against the IRS all on your own. Your chances of success are far greater if you can count on the help of reliable tax professionals that have experience dealing with the IRS’s complex procedures. If you are the victim of an IRS levy, then time is critical for you to minimize the financial destruction that is undoubtedly already occurring with your personal finances.