Taxpayers who cannot pay back their taxes due to legitimate hardship can submit an offer in compromise. With an Offer in Compromise, the IRS will look at your entire financial situation and the potential to grow your future earnings and come to a compromise on your tax bill if they feel you will not be able to collect it. This might seem complicated, but your tax attorney will be able to help you. After the IRS accepts your Offer in Compromise, your previous tax liability is replaced with the new agreement between you and the IRS. You have a fresh start with the IRS. While you are free from the overdue tax liabilities, the IRS will still expect you to follow certain rules and conditions moving forward to ensure the tax settlement sticks.
First and foremost, stay current on all tax filings and payments for the next five years or your Offer in Compromise will default. Make sure you and your tax attorney stay in communication over any tax complexities especially during this time. The IRS has no interest sending debt collectors after you. Both you and the IRS have spent considerable effort reaching an adequate settlement. Therefore, defaulting on that settlement is in no one’s best interests. Whatever happens, your tax attorney can help you negotiate the options. If you run into a problem, tell the IRS ahead of time and the IRS will often give you a chance to correct it, but your best strategy is obsessive adherence to IRS schedules and filing requirements. One point of minor disappointment is you will not be able to keep your next tax refund. If you have just settled with the IRS, they’ll keep whatever refund might otherwise have owed you, and, no, it doesn’t get applied to your settlement. You can keep the next one though. For more information about how your tax attorney can help you please contact us at 913-735-4829