Anthony Sykes & Company

            When it comes to paying a tax debt, dealing with the Internal Revenue Service ( IRS ) can be challenging. There are programs that are available to help in these situations. One of them is called Offer in Compromise. It allows a taxpayer to pay less than the full amount they owe when considering factors like ability to pay and income. However, an application to this program is not a guarantee of acceptance.           If the Offer in Compromise is rejected, it can be appealed. For that to be successful it must take place within 30 days of the rejection. The appeal must also be specific. There must be documentation to support each area of disagreement with the IRS . In a situation like this, it may be wise to consult a qualified tax professional .

            The pandemic caused a great disruption to many institutions, and the Internal Revenue Service ( IRS ) was not exempt from this. In fact, their mail services were paused for a time and many who had tax balances did not receive a notice for the tax years 2020 and 2021. When tax balances are not paid promptly, penalties and interest will compound the amount. How will the IRS rectify this problem?           At the end of 2023, it was announced that the IRS had created a program to provide relief for those who were not given a written notice that they had a tax balance. They will automatically waive penalties on taxed amounts of $100,000 or less. Those who have already paid may be eligible for a credit on other tax years or a refund of the tax penalty. Those with more than $100,000 in taxes assessed are not automatically enrolled, but they can apply for relief.    ...

                 In our last few posts, we have taken the time to highlight all of the details found in the Taxpayer Bill of Rights . This is the guide for how the Internal Revenue Service ( IRS ) operates. The last point is The Right to a Fair and Just Tax System .           This certainly sounds like a very difficult thing to expect, especially with how things have been going the past few years. But the basic idea is that we can expect the tax system to consider facts and circumstances that affect the ability to pay, or provide information in a timely manner. We have seen this applied the past 2 years when the individual tax filing deadline was pushed back because of COVID-19 . It was not practical to expect people to provide their tax returns at the same time as normal.           If you meet certain conditions and cannot pay your tax debt, yo...

     The Dirty Dozen is a list that the Internal Revenue Service ( IRS ) publishes every year of the most common tax schemes and crimes that Taxpayers should be on the watch for. They peak during Tax Season, but are seen throughout the entire year. One entry on this year’s list has to do with debt resolution companies that heavily promote the Offer in Compromise ( OIC ) program. The fact that they advertise this program with very strict standards as something that can help anyone with tax problems is deceptive and therefore earns a place on the Dirty Dozen list.      These companies will send OIC applications to the IRS . The advertisements will play to hearts of distressed who owe large debts, telling them that they will pay “pennies on the dollar”. The OIC program does allow those who are accepted to pay a compromised amount to the IRS . However, the IRS has many other payment programs that have a much higher likelihood of getting approval for. In...

     The Internal Revenue Service ( IRS ) is reminding Taxpayers who took part in tax payment relief provided due to the COVID-19 pandemic that those owed tax payments, which stopped on March 25, must now resume. The IRS is starting to reopen their offices, as many businesses are reopening, and it is necessary to restart these payments to avoid penalties and interest. There are a few details that Taxpayers must understand when going forward.      Installment Agreements . For those who had paused payments, understand that while interest continued to accrue on these amounts, but the IRS never defaulted your agreement. Contact your financial institution to make sure they restart the direct debit payments if you had them stopped.       Offer in Compromise . If the offer in question is still pending with the IRS , the Taxpayer should simply restart making their normal payments by July 15. The offer will be amended to involve the skippe...

         In our earlier posts on this subject, we discussed how much work it takes to even begin to qualify for an Offer-In-Compromise (OIC). After proving that you are not in a short-term economic hardship or dealing with a surprise due to the Tax Cuts and Jobs Act ( TCJA ) acceptance may be granted. That is when the really difficult work begins.           The Internal Revenue Service ( IRS ) will conduct a special OIC review, which could last up to 2 years . This in-depth investigation will search the history of the Taxpayer in attempt to see if they truly qualify at the offer amount. Are they hiding assets? What does their credit report show? These are some of the questions that the examiner will seek to answer. As a result, its not unusual for an OIC to be appealed to a higher level after the review. This could be due to a dispute regarding asset levels, non-payment while the review is taking place, or n...

        Our last post ended with the point that a Taxpayer must qualify in order to receive an Offer-In-Compromise from the IRS. Detailed and accurate records are required in this process. When analyzing the past tax returns and records, along with the help of a Qualified Tax Professional, they may find that the balance in question is lower than they thought. If that is the case, they should challenge the amount owed and may find a better solution.           Apart from needing detailed records, Taxpayers must recognize that this program is not about negotiating with the IRS . There is simple math involved. If the formula works in your favor, you have a good chance of being able to pay the compromise debt amount. With that said, this amount must be paid . There is no ability to lower the debt any further. For those who have hit hard times, this may not be particularly helpful. We will discuss that in our next article....

         Some might think that if they have hit hard times, or if they have an unexpected tax debt, that this will make them an Offer-In-Compromise candidate. This is very unlikely. From the point of view of the IRS, most people will eventually get a new job . At that point, their income will increase, and they will be able to pay their tax debt. This is the same reason why active businesses are rarely granted Offer-In-Compromise status.           If a business is open, the owner expects to make a profit . With that future profit, tax debt can be paid. If the issue deals with payroll taxes, the resolution becomes even clearer. Those who are considered “responsible parties”, such as owners or financial officers, can be held personally responsible for that tax. Even if you can qualify, the work has only just begun. 

        In our previous post, we discussed how the “Offer-In-Compromise” ( OIC ) program is available to help settle tax debt. However, companies often misrepresent how this program works, and what its requirements are. This is an area worth taking time to consider because there will probably be several Taxpayers with a greater than expected tax responsibility brought on by changes made by the Tax Cuts and Jobs Act. Now we will look at the actual details of this program.           First, there are different kinds of OIC filings . One applies to those who don’t think they owe the tax, another says that they can pay, but it will cause an undue hardship. Very few people use these options. The most popular choice is called “Doubt as to Collectibility”. This acknowledges the debt, but attempts to settle for a lower amount.           For this application to be successful, the ...

         The “Offer-In-Compromise” ( OIC ) program is available to help people to settle their tax debts. This is a fact that is often advertised by different companies claiming to help people reach success in this way. The truth is that very few people are accepted into this program.           The basic viewpoint of the IRS is that most taxpayers can afford to pay their taxes, either with what they have, or on a payment plan. The OIC is only for those who will never pay off the debt within 10 years . That is considered the time limit for the IRS to collect. This is important to consider because with the changes to withholding limits brought on by the Tax Cuts and Jobs Act , many people may unexpectedly owe the IRS when they file. In this situation, an OIC will not work. Our next post will start to explain the requirements for this program.