Currently Non Collectible Status, Offer In Compromise, or Both?

When a case is in collections with the IRS and you cannot afford any payment (as determined by the IRS Collection Financial Standards, you have two options:

  1. Currently Non Collectible Status – Effectively a $0/month payment plan.
  2. Offer in Compromise – A settlement of the entire debt.

Currently Non Collectible status will release garnishments on wages and prevent future bank levies from happening. It is sometimes referred to as hardship status. The IRS will however file liens on your credit report, against any real estate, and against any vehicles you own.

If you already have liens from the IRS, requesting Currently Non Collectible status is best to do prior to submitting your Offer in Compromise. Just in case your settlement is not approved, it is not in collections after it is rejected, it sits in a protected status. If you have an active IRS wage garnishment, it is also best to file for Currently Non Collectible prior to submitting an Offer in Compromise settlement, to make sure your garnishments are released. When you submit an Offer in Compromise, sometimes they release garnishments and sometimes they do not, so its best to make sure its released through Currently Non Collectible status. You may also want to place your case into Currently Non Collectable status if the statute of limitations on your debt is coming up soon, also referred to as the Collection Statute Expiration Date.

An Offer in Compromise can settle your entire debt and absolve it of you completely. If accepted, you have to stay compliant by filing on time and paying in full any tax returns for the next five years that have a balance due. Some clients may qualify for Currently Non Collectible status because they have little income, but will not qualify for an Offer since they have an asset that is worth more than the tax balance.

If you qualify for an Offer in Compromise and have no prior tax liens or active garnishments, it is best to submit it right away rather than file for Currently Non Collectible status first. The IRS reserves the right and can file a lien while your Offer in Compromise is pending, but most of the time they do not. See our Offer in Compromise Guide for more help on this. To find out what will get you a lien from the IRS, see our IRS Lien Guide.

 

Need help with your back due tax debts? Call us at (888) 515-4TAX (4829) or go to taxresolutionprofessionals.com and fill out our contact form. You will be connected with a licensed, expert tax attorney for a free, no obligation consultation!

 

 

Posted in Currently Non Collectible, Offer In Compromise, Tax Attorney, Tax Lawyer, Tax Liens | 3 Comments

IRS Lowers Collection Financial Standards

The IRS just recently lowered their collection financial standard figures for many sections.

The updated figures can be found on the Collection Financial Standards page. This will make it harder for some taxpayers to now qualify for a settlement on their back due tax debts, also known as an  Offer In Compromise.

Need help with your back due tax debts? Call us at (888) 515-4829 and have a free, no obligation consultation with a licensed tax attorney or fill out a request on our contact form at taxresolutionprofessionals.com. We can help you nationwide.

 

Posted in IRS News, Offer In Compromise | 10 Comments

Tax Help For Seniors

There are many seniors out there that need tax help and may owe back due taxes from their previous employment or businesses even though they are now retired. Many seniors are on a fixed income and think that they are going to be stuck paying all their back due tax debt, but fixed income seniors do have options when it comes to their back due debt.

The IRS is usually in favor of settling debts for its older taxpayers as long as they can prove they do not have sufficient assets or income to pay off the debt.

These are the things the IRS is going to consider regarding your debt and whether or not it can be settled through an Offer In Compromise:

Did you spend funds on things other than necessary living expenses that could have been used to pay off the debt, while the debt was still active?

They call this a dissipated asset. Essentially – if you owed money to the IRS and received funds elsewhere and spent it on something that was not living expenses, the IRS will often treat those funds as if you still have it in their calculation, even though it is gone. This is to prevent people from avoiding paying the IRS and then asking for a settlement later, when they had funds to pay towards the debt

Does the senior have a sufficient amount in their retirement account or paid off properties that could be sold to pay the debt?

If the person has more assets then the amount owed, the IRS will generally not accept a settlement for less than the full amount due. However, the IRS still might put the case into hardship status, resulting in you not making a monthly payment on the debt. Since the IRS only has 10 years to collect, we put clients into hardship status that would not qualuify for an Offer In Compromise settlement, and its almost like a settlement since they end up not paying back the debt anyway. The debt eventually falls off the system and they are free and clear.

However, should you have sizable assets (ie: Your tax debt is $50,000 and you have a 401K value of $250,000) you may end up getting stuck paying it back, in which case we would try to remove penalties for you.

If you do not have sufficient assets to pay the debt, the IRS will then look at your income vs. your expenses to determine if you would be able to settle the debt.

Does the person’s monthly income exceed their monthly expenses?

If you are only receiving Social Security income then most of the time you will qualify for an Offer In Compromise. If you are receiving another retirement payment as well then it may be more difficult to qualify.

Now what do I do?

If you are a senior who needs tax help you can see our guide on how to do your own offer in compromise. If you want one of our attorneys to handle it for you, give us a call at (888) 515-4829 or submit a contact request on our main website taxresolutionprofessionals.com

Posted in Offer In Compromise, Tax Attorney, Tax Lawyer, Tax Payments | Tagged , | 2 Comments

When Are IRS Tax Liens Filed? How Can I Avoid Them?

For purposes of back due tax personal tax debts, the Internal Revenue Service typically files a lien in the following situations:

  1. You have a balance over $10,000 due and your account is placed into Currently Non Collectable Status.
  2. You have a balance of over $10,000 due, it has been past 30 days since you received a Final Notice of Intent to Levy and you or your representative have taken no actions to try and resolve the account.
  3. You owe $10,000 or more and set the balance up into a payment plan that does not full pay the balance within 72 months.
  4. You have a balance over $50,000 and enter into a monthly payment plan.
  5. An Offer In Compromise is pending with the IRS on a balance due over $10,000. They usually do not file this while the offer is pending but I have seen them do it. They send you a letter on every offer that states they reserve the right to file a lien while the offer is pending.

Here are some easy ways to avoid IRS tax liens:

  1. For any amount due up to $50,000, enter into an IRS Fresh Start payment plan to pay off the debt in 72 months or less.
  2. For amounts over $50,000, pay it off or pay the balance below $50,000 before entering into a payment plan.
  3. If you have no way to pay and have no tax liens, consider filing an Offer In Compromise.

If you have a lot of other debt, you might want to look at a Bankruptcy instead of an Offer In Compromise.

Not sure what to do and need help with your back due tax debt? Give us a call at (888) 515-4829 or fill out the contact form on our website here. One of our expert tax attorneys will consult you for free for 15 minutes with no obligation.

 

This is not intended to be legal advice and is for information purposes only.

 

Posted in Tax Attorney, Tax Liens | Tagged , | 4 Comments

Can the IRS take My House?

This question is asked by many people, and the answer is yes, but usually in limited circumstances. Usually The IRS will not take a primary residence even if there is sufficient equity to pay the debt.

If you have more assets than the tax debt but enter into a payment plan, the IRS will not take investment properties either as long as you are working towards paying the debt.

If you are unsure about your situation, the best thing you can do is talk to a qualified tax attorney. For a free, no obligation consultation with a tax attorney call (888) 515-4829.

Posted in Uncategorized | 1 Comment

IRS Tax Law Line Closed

The Internal Revenue Service has closed its Tax Law Hotline. This service was useful to get clarification on certain items and forms when the IRS instructions were not clear for a particular situation. Many IRS agents do not know the line is closed, but it now redirects to a voicemail that says go to IRS.gov.

Posted in Uncategorized | 1 Comment

Oregon Tax Penalty 100% If Returns Not Filed for 3 Years in a Row or Longer

The Oregon Department of Revenue assesses heavy penalties on non filing taxpayers, especially if they have not filed for three years in a row or longer.

The penalties are as follows:

•  5 percent late-payment penalty
on any unpaid tax after the return’s (Form OA)
due date.
• an additional 20 percent penalty
on any tax due as of the due date if you file
Form OA more than one month late.
• a 100 percent penalty may be assessed on any
tax due if you don’t file Form OA Domestic for
three years in a row.

 

If you are assessed a penalty definitely contest it as you may be able to save something.

Posted in Oregon State Taxes | Leave a comment

Easiest Ways to Pay the IRS

If you owe a debt that cannot be settled, then you are stuck paying it off. If you are paying off in full, these are the easiest ways to pay off the IRS:

1) IRS Direct Pay System – Make sure to select the appropriate year you are paying off. This links directly to your bank account.

If you are paying estimated tax payments, make sure to select 1040ES and it will apply to the current year.

If you are making a payment plan payment, select “1040, 1040A, 1040EZ,” then “Installment Agreement,” and then select the tax year to which you want the payment applied.

If you are paying off a 1040 individual income tax year make sure to select “Tax Return or Notice.”  Then “1040, 1040A, 1040EZ.” Then select the tax year you want to pay off. You also would do this for making payments towards a tax year that is not in an installment agreement.

2) Pay by Credit Card – See our guide to the Cheapest way to pay the IRS by credit card. If you are paying estimated tax payments, make sure to select 1040ES and it will apply to the current year.

3) Pay by Mail – You can also pay the old fashioned way, by check. To do this, send payment with a voucher if you have one. A voucher is not required. Whether or not you send a voucher, it is recommended to write the primary Social Security Number, Tax Year and Number (ie: “TY 2014”), and Form Number. Paying for estimated tax payment is notated slightly differently as shown below.

The memo line should look like:

TY 2014, Form 1040, SSN# 555-55-5555

If you are making an estimated tax payment the memo line should look like:

TY 2016, Form 1040 EST PAYMENT, SSN# 555-55-555

This ensures the IRS applies it correctly. If there is a time deadline for your payment, it is recommend to send it certified mail with return receipt. The IRS often will misapply payments, so it is important to notate checks correctly.

It is strongly recommended to pay via an electronic payment method. Sometimes, the IRS does lose checks.

An important note on Estimated Tax Payments: If you have a pending Offer In Compromise with the IRS or plan to submit one soon, it is recommended to pay estimated taxes on a monthly basis until your Offer is complete.

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IRS, California FTB, and Other Old Tax Forms

Old IRS Forms can be found on the Prior Year Products Page. Most people are looking for “Form 1040” for a personal tax return, so just type “1040” in the search box and you will see all the older years popup. If it is a different form, just use the form number to find it.

Old FTB forms can be found on their 2010 and Prior Year Tax Forms Page for items older than 2010. Franchise Tax Board is the state income tax entity for California. The standard income tax form for California is “Form 540.”  2011, 2012, 2013, 2014 and 2015 forms can be found on the regular FTB Forms and Publications Page.

This list will be updated with other old tax forms from time to time.

Posted in Uncategorized | 1 Comment

The IRS Hates Staples and Sending in Multiple Tax Returns

The IRS does not like staples, a lot of the information is scanned. It is recommended to send in information without staples to the IRS.

When sending in multiple tax returns in the same postal envelope, make sure to put them each separately in their own envelope before then placing them into a larger postal envelope to mail. Often the IRS will lose all the returns behind the first one.

Posted in Uncategorized | Leave a comment