Costa Mesa, CA (PRWEB) June 21, 2015
Distressed taxpayers faced with a substantial tax bill may be tempted to seek relief through either an Offer In Compromise (OIC) or Installment Agreement, both of which are offered by the Internal Revenue Service (IRS). Taxpayers may be tempted to file for payment relief assistance on their own, but industry professionals advise taxpayers to seek professional guidance when contemplating tax debt relief.
“Both programs have their advantages and drawbacks, and a licensed tax professional is the best person to help a taxpayer determine which program is best for their specific financial needs,” says Tax Solution, LLC Executive Team member Murad Khatib
The Offer In Compromise (OIC) allows taxpayers to settle their tax bill at a discount, in some cases as little as 1% of the total amount due. The burden of proof is on the taxpayer or their legal representative to prove that one of two conditions exists: Doubt as to collectivity, or doubt the tax bill can be collected presently or in the future.
The second condition exists when payment of the tax bill would create an economic hardship for the taxpayer, or when payment of the tax bill is considered unfair to the taxpayer.
Both scenarios would require considerable supporting documentation along with filing of IRS form 656, a Collection Information Statement, and the $186.00 filing fee. Taxpayers whose monthly income falls at or below the poverty may qualify for a fee waiver.
Taxpayers must also agree in advance on the number of payments to be made, as well as the length of time it will take to satisfy the debt. An initial payment is required at the time the forms are filed.
“Interest will accrue during the negotiation process, in some cases creating an even larger debt,” Khatib says. “Taxpayers must also agree to make their payments on time with no delays.”
“Enlisting a licensed tax professional is key to avoiding errors on the forms and in deciding on a manageable payment. Errors can result in delays, which in turn could cost the distressed taxpayer even more money in the long run,” Khatib adds.
Taxpayers owing $50,000 or less may qualify for an Installment Agreement (IA) without supporting documentation and negotiating with the IRS, but there are drawbacks, including accrued interest and penalties on the balance due. Interest rates could vary between 8-10%.
Taxpayers must be current on their tax returns. Under the 2008 IRS Fresh Start program, the IRS adopted new rules that make it easier for a taxpayer to obtain an IA. The balance threshold was increased from $25,000 to the current $50,000 without supporting documentation. “Taxpayers owing more than $50,000 will be required to provide supporting documentation to substantiate their request,” Khatib states.
While the new rules can make an IA more accessible, a qualified tax professional can guide a taxpayer through all options that are available to them, not just the OIC and IA programs.
A skilled tax professional can be a distressed taxpayer’s best advocate when negotiating with the IRS, a process that most taxpayers are ill equipped to undertake on their own.
Ideal Tax Solution LLC employs a staff of Enrolled Agents, tax attorneys and tax consultants to assist distressed taxpayers in determining their best course of action in resolving an outstanding tax debt.
About Ideal Tax Solution LLC
Ideal Tax Solution LLC is based In Costa Mesa, CA and provides tax debt relief, tax negotiation and tax preparation services, and is a professional collection defense company. With over fifty-five years of combined experience, their Tax Attorneys, CPAs, and Senior Tax Consultants have assisted American taxpayers in resolving tax matters with the IRS and state tax agencies. The city of Costa Mesa recognized Ideal Tax Solution LLC as 2014 Best Tax Prep/Tax Resolution firm.
3525 Hyland Avenue
Costa Mesa, CA 92626
(714) 751-5200 ext. 204