IRS Tax Settlement
Are you looking for help with tax debts? IRS tax settlement help may be just a phone call away. Our trusted tax lawyers have years of experience helping clients settle their back tax liabilities and have saved our clients millions of dollars along the way. To learn more about our tax settlement services contact us by calling 1-888-TAX-LADY or by using our contact form.
What Is Tax Settlement?
The phrase tax settlement usually refers to the process where taxpayers settle their back tax liabilities with the Internal Revenue Service (IRS). Specifically, taxpayers reach an agreement or settlement, with the IRS agreeing to pay their income tax debts in part or in full through one of the IRS’s back tax settlement programs. The IRS offers several different back tax resolution programs to taxpayers based on their individual financial situations. However, before the IRS will consider an offer to resolve back taxes, taxpayers must be fully compliant with their tax obligations. The exact tax obligations vary, but typically taxpayers must have all past-due tax returns filed and they must remain compliant with ongoing payments.
What is a CP2000 Notice?
A CP2000 notice is issued when the Internal Revenue Service (IRS) suspects that a federal income tax return has either under reported income, taken excessive credits or deductions, or both. The notice will document the IRS’ proposed changes to the tax return, the reasoning for the changes, and will propose a new balance they believe the taxpayer owes after accounting for these changes. The form will also set a deadline for a response, typically 30 days after the date of the letter.
Abatement of Penalties
When a taxpayer fails to file a timely return and/or fails to pay their tax when due, the IRS charges the taxpayer interest and penalties. The interest and penalties are designed to encourage compliance and create fairness in the tax system. Many times the interest and penalties assessed by the IRS can increase a taxpayers IRS debt by up to fifty percent.
Personal Tax Compliance
To reach a tax settlement with The Internal Revenue Service (IRS), they will require the individual to file all past-due tax returns. In general, the IRS will require the filing of all tax returns for the past six years. However, in certain circumstances, the taxpayer may be required to file older tax returns. The taxpayer may not be required to file all returns to reach an IRS tax settlement if their income fell below the minimum filing requirement for specific tax years.
Business Tax Compliance
The IRS will require the business to file all past-due tax returns in order to reach an IRS tax settlement. Corporations will be required to file any missing or delinquent 1120 or 1120s tax returns as appropriate. Partnerships must file all of their 1065 tax return forms. In addition, any business with employees, must file all form 940 and 941 payroll returns.
Dissipated Assets
Before it accepts a tax settlement Offer in Compromise (OIC), the IRS will take a very close look at the taxpayer’s financial history. During this investigation, the IRS often discovers issues that may cause it to reject the settlement. One such issue is the existence of dissipated assets. This issue arises when a taxpayer sells, spends or otherwise disposes of an asset that they could have used to pay their tax liability. When this occurs, the IRS will often reject the OIC, or demand that the amount offered increase to include the amount of the dissipated asset. Dissipated assets usually occur when the asset is disposed of after the tax liability accrues.
Currently Not Collectible Status
Many taxpayer’s find themselves in a situation where they are behind on their federal income taxes, but do not currently have the ability to make any payments towards their past due tax liability. If your find yourself in such a situation, you may be able reach a tax settlement with IRS by placing your account into Currently Not Collectible Status (“CNC”). The IRS typically uses CNC status to protect taxpayers from undue hardship that can be caused by collection activity.
