Tax Collections: Offers in Compromise and Installment Agreements
For individuals and businesses with significant and longstanding tax delinquencies, the threat of potential enforcement actions by the Internal Revenue Service or other taxing authorities can cause significant stress. If matters are left unresolved, threats can quickly turn into harmful collection actions like the filing of a notice of tax liens, levies on bank accounts, garnishment of wages, and, for the worst offenders, foreclosures of liens on real estate. These actions can lead to the loss of customers, reductions in revenue, closure of a business, and significant individual financial and legal issues. But these problems do not have to go unresolved. Crepeau Mourges has the experience, skills, and focus to help resolve your lingering tax issues and put these issues in the past. We can deal with these tax agencies on your behalf and negotiate an Offer in Compromise, installment agreement, or other collection alternatives to address these issues.
First Steps: Stopping Collection Activity
Oftentimes, the tax notices and collections are so overwhelming that a taxpayer does not know where to begin to solve the problems. Even if they want to address it, they do not know what taxes and penalties are owed, what tax returns have or have not been filed, and who to talk to. If you are dealing with a situation like this, Crepeau Mourges can quickly identify the issues, work to cease collection activity and get you on the path to success.
Shortly after being engaged, we can contact the appropriate officials at the taxing authorities to obtain a full history of your tax accounts, any collection activity, and any other issues. Since all tax returns must be filed in order to obtain a collection alternative, we can obtain the necessary information to prepare accurate tax returns for you or work with your tax preparer. We will advise of your current and future obligations to ensure that the problem does not needlessly persist. Sometimes, this involves hiring an outside accountant, finding a payroll services provider, or setting up a system to make required withholding or estimated tax payments.
If collection action has not yet begun, we will explain the different paths to resolving a matter. This might involve making voluntary payments, waiting for future events to occur, or something else. If collection action has already begun, we can devise a strategy to temporarily halt this activity so collection alternatives may be considered. Frequently, we file requests for Collection Due Process (CDP) hearings and Collection Appeal Requests (CAP) in order to slow collection action. In other circumstances, we can quickly work with taxpayers to prepare requests for Offers in Compromise (OIC), installment agreements, and other related filings, which can also temporarily stop collection action and allow taxpayers to more effectively work to resolve delinquencies. Fortunately for those actively pursuing resolution, a collection alternative that is pending or finalized will generally terminate any future collection actions, such as levies and garnishments.
Review of Financial Information and Selection of Collection Alternative
Once collection action has ceased – at least on a temporary basis – the attorneys at Crepeau Mourges will work in an efficient manner to collection necessary financial information and help you to select the best strategy. The proper path will be guided by a host of considerations from the amount of tax due, the type of tax due, the status of applicable statutes of limitations, prior and potential collection actions, remaining options for administrative appeals, business circumstances and effects on credit, and, perhaps most importantly, your ability to effectively pay these delinquencies over different time horizons. In order to obtain a collection alternative, taxpayers must present detailed financial statements – e.g., on Form 433-A, Form 433-B, or Form 433-F – in order for the taxing authority to make a determination of “reasonable collection potential.” Crepeau Mourges will explain what information the taxing authorities require, how collateral effects can be minimized, and can accurately present and substantiate this information.
In addition, we have significant experience in preparing these filings and can effectively maneuver administrative guidance to minimize your “reasonable collection potential” and allow the most affordable collection alternative. We are prepared to advocate on your behalf to defend these positions, whether before an offer examiner, revenue officer, settlement officer, or government attorney. Once we have documented your collection potential, we work with you to determine eligibility for the various collection alternatives and explain how they can resolve your issues.
Offers in Compromise: A Great Option for Those Experiencing Financial Hardship
For those that qualify, an Offer in Compromise (OIC) can be a great tool to resolve a tax liability. As its name implies, this method allows for a debt to be compromised (or resolved) in exchange for payment of less than the full amount. Although an OIC can be pursued based on doubt as to liability or based on exceptional circumstances, the most common Offer in Compromise is based upon a “Doubt as to Collectability.” Basically, the taxing authority is willing to accept less than the full balance due because there is some risk that it will not be collected in full if it is required to pursue administrative collection. This gives the taxpayer a clean slate and allows revenue officers to devote their limited resources elsewhere.
To qualify for an Offer in Compromise, a business or individual must be able to document that it cannot pay off the balance within the remaining collection statute of limitations. This determination is made by filing a complete and substantiated Form 433-A, Form 433-B, or other financial statements, as applicable. Taxing authorities will review the reported assets and net income to compute a reasonable collection potential. For the Internal Revenue Service, most of these determinations are made by Offer Examiners in centralized locations to maintain consistency. Assuming the reasonable collection potential is less than the remaining balance, the Internal Revenue Service allows taxpayers to pursue a Lump Sum Offer or Periodic Payment Offer, which entails different timing and payment options.
Crepeau Mourges has negotiated many complex Offers in Compromise on behalf of its clients. We understand your business and personal finances and will employ a strategy that works for you. We also can effectively present, negotiate, and appeal calculations that determine your ability to pay. Given that the overall success rate for Offers in Compromise is less than 50% and success can save taxpayers significantly, it is often in taxpayers’ best interest to seek out a skilled professional like those at Crepeau Mourges to ensure they are making the most of available procedures.
Installment Agreements: Achieve Tax Compliance and Minimize Related Consequences
If a taxpayer is not eligible for an Offer in Compromise or it is otherwise not feasible, an installment agreement can provide a good solution. Unlike an OIC, taxpayers are typically eligible for installment agreements regardless of whether or not they can afford to pay the balance due within the statute of limitations. Furthermore, there are many different types of installment agreements available and they vary based on the type of taxpayer, the amount of tax owed, the amount of financial information provided, and other factors. The attorneys at Crepeau Mourges have successfully negotiated hundreds of installment agreements, including partial payment installment agreements, Streamlined Installment Agreements, short- and long-term installment agreements, and many other varieties. If properly structured, an installment agreement can help to resolve outstanding obligations with little collateral consequence to the taxpayer.
Most installment agreements can be negotiated over the phone with representatives of the Internal Revenue Service referred to as the Automated Collection System (ACS). For relatively low balances due, ACS can determine an appropriate option based on verbal collection information collected from Form 433-F. Many types of installment agreements can be administered by ACS; however, the Internal Revenue Service frequently changes administrative options and requirements and their authority is subject to change at different numerical thresholds. Even when a matter can be resolved through ACS, Crepeau Mourges can help to negotiate beneficial terms of installment agreements, including monthly payments, terms, and other conditions (such as if a notice of lien will be filed).
When installment agreements cannot be negotiated over the phone – whether due to a substantial balance, compliance issues, a specific type of installment agreement, or prior assignment to a revenue officer – Crepeau Mourges can help to negotiate the best result for you. We frequently work with revenue officers and other collection representatives and achieve positive results for our clients. As with other collection alternatives, we use our advanced knowledge to present your financial situation in a light most favorable to you. This frequently will result in an acceptable resolution.
Crepeau Mourges Advocates for Your Best Outcome
That said, if a revenue officer is not following applicable guidance or is acting unreasonably, we will do what is necessary for you. Depending upon the circumstances, we can use administrative remedies like managerial conferences, Collection Due Process (CDP) hearings, Collection Appeals Requests (CAP), and requests for assistance from the Taxpayer Advocate Service to ensure that procedures and collection standards are followed. Crepeau Mourges has utilized these policies in the past to achieve the best outcomes for its clients, which have included minimal monthly payments, partial payment installment agreements, avoidance of lien filings, and other favorable outcomes.
Call Crepeau Mourges today to see how we can help you to resolve your outstanding tax issues with a collection alternative. Aside from our experience with Offers in Compromise and installment agreements, we can work with you to request Currently Not Collectible (CNC) status, abate penalties, obtain innocent spouse relief, remove holds on licenses and passports, and more. We will hold collection representatives to account, ensure that your rights are preserved and maximized, and help you to move forward with your life.
Don’t Get Stuck with a Tax Bill: 5 Tips from a Collections Lawyer
Tax season can be a stressful time for individuals and businesses alike, especially if you find yourself in the unfortunate situation of owing the IRS, but with the help of a Hanover, MD tax collections lawyer you can avoid problems with the government. The thought of dealing with collections lawyers and mounting fees can be overwhelming. But don’t despair – with the right advice from an experienced professional, you can successfully navigate this tricky terrain. Here are five pieces of advice from a tax collections lawyer to help you avoid getting stuck with a hefty tax bill, but if you do find yourself in trouble, contact an attorney today at Crepeau Mourges.
1) File Your Taxes on Time
Taxes are due by April 15th of each year. Filing your taxes late can result in penalties and interest, so it’s important to make sure you submit them on time. If you’re having difficulty meeting the deadline, consider filing for an extension or contacting a tax professional for help.
2) Pay Your Taxes in Full
When it comes to taxes, the best way to avoid interest and penalties is to pay your taxes in full on time. If you owe taxes, make sure you have enough funds saved to pay the bill in full. When it comes to taxes, the best way to avoid interest and penalties is to pay your taxes in full on time. Filing your taxes late or failing to pay in full can result in hefty fines and interest charges. Therefore, if you owe taxes, make sure you have enough funds saved to pay the bill in full.
If you cannot cover the entire amount due, you should contact the IRS as soon as possible. The IRS offers a variety of payment plan options, depending on your situation. If you can’t afford to pay the entire amount all at once, you may be able to arrange for installment payments. Depending on the amount owed and your financial situation, the IRS may also reduce or waive penalties and interest charges. Regardless of how much you owe, it’s important that you don’t wait to take action. The longer you delay paying your taxes, the more penalties and interest will accrue. Therefore, it’s important that you work with the IRS and a Hanover tax collections lawyer as soon as possible to determine a payment option that works for your budget.
3) Make Estimated Tax Payments
Estimated tax payments are required for those who don’t have taxes taken out of their income regularly, such as freelancers or self-employed individuals. It’s important to make regular payments so you don’t face a large tax bill at the end of the year. The IRS offers helpful guidance on estimated taxes, and you can use their calculators to determine how much you need to pay.
4) Keep Good Records
Maintaining accurate and complete financial records is an important step in avoiding tax problems. Make sure to keep all your receipts, invoices, bank statements, and other documents that show income or expenses related to taxes. This will make it easier for you to prepare your tax return accurately and provide proof of payments or deductions if you’re ever audited by the IRS.
5) Work with a Qualified Tax Professional
Tax laws are complex and it’s important to get help from a qualified tax professional. A qualified tax professional can provide advice on filing taxes, ensure that your taxes are accurate and minimize the amount of taxes you pay. They can also negotiate on your behalf with the IRS if you have unpaid taxes. Working with a professional is the best way to get the most accurate advice and ensure your taxes are in order.
If you need help, contact a Hanover tax collections lawyer at Crepeau Mourges today.
