IRS TAX NEGOTIATION
The IRS is generally limited to a ten year statute of limitations to collect federal income taxes, which may be extended in cases of fraud. This limitations period is temporarily tolled, though, if you file for bankruptcy or bring legal action against the IRS. Prior to the ten year statute of limitations running out the IRS will use aggressive collection methods, including garnishing your wages, putting liens on your property, and seizing your bank accounts and vehicles to recover the amount you owe them.
If you owe federal income taxes to the IRS and cannot pay, the Yonsei Law Firm can negotiate with the IRS to lower the amount you owe or schedule a reasonable payment plan that works for you. Each taxpayer’s situation is unique and there is no one-size-fits-all solution. The Yonsei Law Firm works with its clients to determine the best program and strategy necessary to relieve the client’s tax burdens.
Some of the most common options include the following:
NEGOTIATING AN OFFER IN COMPROMISE (OIC)
An Offer in Compromise (OIC) is an IRS program which allows you to settle your tax liability for less than the full amount you owe. This is the program that you often hear advertised as promising to settle your tax bill for “pennies on the dollar.” In reality, this program has a very low acceptance rate, and whether the IRS will accept such an offer primarily depends on your individual financial circumstances. The Yonsei Law Firm can help determine if this program is right for you and can negotiate for an Offer in Compromise if there is a doubt as to whether the amount assessed against you is correct, if there is doubt about whether the IRS will be able to collect the full tax obligation from you, or if collecting the full tax amount would create an injustice against you if you are elderly or disabled.
Through an Offer in Compromise, you must prove that it is financially impossible to pay off the full amount you owe within the 10 year statute of limitations period. You will be required to pay the maximum amount that you can afford based on your disposable monthly income and the reasonable collection potential (RCP), which is calculated based on your assets such as real property, automobiles, and bank accounts. If the IRS accepts your Offer in Compromise, you will have to pay the agreed upon amount as a lump sum for the IRS will remove its tax liens and stop its collection efforts.
BARGAINING FOR ADDITIONAL TIME TO PAY
If you cannot pay the full amount of taxes that you owe to the IRS all at once, but can afford to make monthly payments to settle your tax obligations, the Yonsei Law Firm can assist you in negotiating an installment agreement so you can pay off the amount you owe over time. Depending on the amount you owe, the IRS may require that you disclose detailed financial information to see if you quality for this relief. You may also qualify for a Partial Payment Installment Agreement, which is best described as a merger between an Installment Agreement and an Offer in Compromise (OIC). Through a Partial Payment Installment Agreement, the IRS agrees to accept an amount lower than the full amount owed through monthly payments instead of the lump sum required in an OIC.
REMOVING TAX PENALTIES THOUGH PENALTY ABATEMENT
The IRS assesses penalties both when you do not file your tax return on time, and if you do not pay the amount you owe on time. If you are able to pay the full amount of your tax obligation and have a compelling reason for not filing your tax return or paying your taxes on time, such as the death of an immediate family member or significant property damage as the result of a natural disaster, the Yonsei Law Firm can help you apply for the a tax penalty abatement program.
Two of the most common Penalty abatement programs are the First-Time Penalty Abatement (FTA) and the Reasonable Cause Penalty Relief. These programs will eliminate the penalties assessed against you, but will not reduce the amount you owe to the IRS or any accumulated interest.
APPLYING FOR CURRENTLY NOT COLLECTIBLE (CNC) STATUS
If you are suffering from a financial hardship and simply cannot pay what you owe the IRS, the Yonsei Law Firm can help you request that your account be placed in Currently Not Collectible (CNC) status. However, to apply for this status, you will have to provide detailed financial information to prove the hardship. This status will not eliminate the taxes you owe to the IRS or any penalties incurred, but it will temporarily stop IRS collection efforts. The IRS periodically reviews CNC accounts to determine whether a change in your income or circumstances affects your ability to pay. In some cases, CNC status may last the entire 10 year period the IRS has to collect the taxes.