Tax Debt

If you are facing delinquent tax debt, unfiled returns, liens, levies or other issues with the Internal Revenue Service, regardless of the size, scope or nature of the problem, I will work with you and assist you in obtaining the best resolution possible. When faced with the problem of delinquent taxes a taxpayer has a number of available options, including challenging the liability, waiting for the statute of limitations to run, pay through an installment plan, submit an offer in compromise, seek noncollectable status or innocent-spouse status, request a due process hearing or collection appeal and, under certain circumstances, taxes, interest and penalties can be discharged in a Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Offer in Compromise

An offer in compromise (OIC) is an agreement between you and the Internal Revenue Service (IRS) that allows you to settle your tax debt for less than the full amount you owe. If you can't pay your full tax liability, or if doing so will create a financial hardship, an offer in compromise may be a viable option. The amount that the IRS is willing to accept in settlement is the cash equivalent of what the IRS could collect by levy or other seizure of your income and assets over a certain period of time.

There are three types of offers in compromise:

  1. Doubt as to liability – "I don't owe this tax."
  2. Doubt as to collectability – "I don't have enough money to pay this tax." You must establish that the IRS is unlikely to ever collect the full amount of the tax debt that you owe under any circumstances.
  3. Effective tax administration – "I have the ability to pay this but it would be unfair for me to do so." This is if you can demonstrate extenuating or special circumstances that paying this debt would create an unfair economic hardship or would be unfair and inequitable. This offer in compromise program is available for any taxpayer, but is primarily used by individuals who are elderly, disabled or have special extenuating circumstances.

Submitting an offer to the IRS does not necessarily mean it will be accepted. When evaluating your offer the IRS considers your:

  1. Ability to pay;
  2. Income;
  3. Expenses; and
  4. Assets.

Before you file an offer in compromise you must (1) file all tax returns you are legally required to file, (2) make all estimated tax payments for the current year, and (3) make all required federal tax deposits for the current quarter if you are a business owner with employees

Contact a Lawyer that will help you resolve your Financial Problems

If you need assistance getting out of debt, contact an experienced bankruptcy law attorney at the Law Offices of Steven C. Hathaway, P.C., at 360-676-0529. We offer free initial consultations at our Bellingham, Washington, office.