If you have an IRS debt that you really cannot pay off, there is an excellent chance you can settle your debt with the IRS for a figure you can afford.
Many marginal tax firms promote settling your tax debt for “pennies on the dollar”. This can be misleading. Yes, we at Torchlight Tax have settled IRS debts for “pennies on the dollar”. I once had an 80 year old client with a $1.8 million dollar debt who I negotiated a $75 per month payment plan. And when he departs this life, the debt is gone.
But “Settle IRS debt for pennies on the dollar” is a bit misleading. The IRS will settle for “pennies on the dollar” if that is all that they realistically can get, and if we can prove to them that is the case with the meticulous paperwork required, the IRS Code states: “We will accept an Offer in Compromise when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential…” (Internal Revenue Code section 7122). The compromise program also allows taxpayers to settle with the IRS on tax debt that has been incorrectly assessed or for liabilities they cannot afford to pay.
The application fee for an Offer in Compromise is nonrefundable and must be included with the offer unless you qualify for an exception as a low-income taxpayer.
To submit an Offer in Compromise, you must include an initial payment along with your application. This initial payment is also nonrefundable.
Supporting documentation is crucial when submitting an Offer in Compromise. This includes financial information, detailed explanations, and any relevant evidence to support your offer.
The IRS evaluates the taxpayer’s ability to pay by considering the taxpayer’s assets, including real property, automobiles, and other property. They assess the amount of equity in these assets to determine the reasonable collection potential (RCP).
Bank accounts are also considered part of the taxpayer’s assets when calculating the RCP.
The IRS calculates the RCP by considering anticipated future income and allowing certain amounts for basic living expenses to measure the taxpayer’s ability to pay.
Economic hardship is another factor that can impact your application. If paying in full would create an economic hardship, this can be considered in your favor.
The IRS will also consider whether accepting the offer is in the best interest of the state when making their decision.
Low-income taxpayers may qualify for a waiver of the $205 application fee, making it easier for them to apply for an Offer in Compromise.
To be eligible for an Offer in Compromise, you must have filed all required tax returns and made all required estimated tax payments for the current year.
An open bankruptcy proceeding is one of the reasons the IRS may return your application without consideration.
If the IRS rejects your offer, you have the right to appeal the rejection and can explore other tax-relief options like installment plans or ‘currently not collectible’ status.
The tax debt included in your offer must be one for which you have received a bill from the IRS.
Your tax filing status is also considered when determining your eligibility for an Offer in Compromise.
If the IRS rejects your offer, any payments made will be applied to your outstanding tax liability.
To find out whether an Offer in Compromise (OIC) might be a solution to your situation, contact Torchlight Tax & Accounting in Las Vegas for a free consultation.
Call us at 1-877-758-7797 or 702-463-1818 or email us at info@TorchlightTax.com. We can transfer your call to a branch office near you or help you directly from our central office. Free consultations are available.
Many people do not know how a professional tax and accounting firm differs from a bookkeeper or tax preparer. The main difference when working with a professional tax and accounting firm, such as Torchlight Tax, is that our firm utilizes the services of CPAs, EAs, and Attorneys who are distinguished from bookkeepers and other tax preparers by stringent qualification and licensing requirements. Our entire team has a purpose to legally save your tax dollars and to make taxes as painless as possible. This means we take your calls and respond to your concerns. If you receive a threatening IRS call or Notice or are worried about some tax question, we are here for year round taking your calls and responding to your emails.
Whether you are filing personal, small business, or corporate taxes, or negotiating IRS tax debt, if you are not already using a professional Tax, Accounting and IRS Representation firm, you most likely have missed out on major tax benefits. This is because a professional tax and accounting firm utilizes licensed professionals such as Certified Public Accountants (CPAs), EAs and Attorneys, who can not only advise individuals on personal financial matters but who can also advise businesses and corporations of all sizes and types. Tax laws are complicated, and no one knows everything. Torchlight Tax is a team and any one of our tax pros can call on other EAs, CPAs and Tax Attorneys in the team who may have specialist knowledge in a specific area of tax.
When doing current taxes, we often come across missed tax savings from prior years. When this happens, the Internal Revenue Service allows you to amend your taxes and lower your tax liability. Whether you or your prior tax preparer missed a W-2 or 1099, a revised 1099. large charitable donations, or made some other error, amending your tax return can help you recover the money you are rightfully owed. When we find this situation, we will advise you on potential savings and amend the previously filed tax return.</p”>
Sometimes, there may be a situation where a tax return could be amended, but it is too late to receive any benefit. Or maybe you made an error that was missed by the IRS that would have increased your tax liability. In some cases, it is prudent to file an amended return. But if it is not necessary and will not save you any money or decrease your risk, we will tell you not to bother. It is silly to amend a return to no advantage which is too old for the IRS to audit. Some firms might file a bunch of unnecessary tax returns and charge a fee. Sometimes a taxpayer himself might increase his tax liability by filing an unnecessary amendment that increases his tax liability. We will not do this.
Amending a tax return requires more professional acumen then doing it right in the first place. At Torchlight Tax, we do file the tax return correctly the first time. And we will happily amend your tax return, but only if it actually is to your benefit. If you think you might need to amend tax returns, contact Torchlight Tax for a free consultation.
Changed my tax prep to Torchlight and David Horwedel this year. What a pleasant surprise! I have been self-employed for over 30 years and this is the best tax service I've ever had. Goodman, David. Keep up the good work.
My fiancé has been going to David Horwedel for his taxes and I saw last year how well he handled his. So this year, I went to him for mine and I'm so glad I did! He ended up fixing my 2016 year taxes and now I feel I have them accurate with the best return possible.
