Welcome to Crest Tax Group’s general questions and answers area. We specialize in providing affordable solutions to businesses and individuals alike who find themselves in trouble with the IRS or State Taxing Authorities. Here, we feature some of the most frequently asked questions from our clients.
How is the amount of the offer calculated in an Offer in Compromise?
There are two parts to the formula. The first is the equity in assets you own, the second is based on the income you have available each month after paying for allowable expenses, multiplied by a factor of 48 or 60.
After we settle, will I be in good standing with the IRS/State?
Yes. For the next five years, however, you must remain in compliance with the tax laws. This means you must file and pay all subsequent tax returns in a timely manner. You must also make timely estimated tax payments if required.
Is the IRS/State required to give me a payment plan?
If you owe the IRS less than $10,000 of tax and it can be paid in 5 years, you have the legal right to a payment plan. The IRS also has a streamlined plan that can be arranged if you owe a total of less than $25,000 including penalties and interest, and if it can be repaid in 5 years. This is not a legal right, but it is IRS policy. The professional cost to secure one of these should be a low fixed fee. State Taxing Authorities policies differ within each state.
How long does it take to negotiate a settlement with the IRS/State?
It usually takes about 7 months to settle with the IRS/State. First we need to gather evidence for the case, which would include financials for an Offer in Compromise and a narrative for Penalty Abatement. This takes approximately one month. Then we submit the OIC to the IRS/State for review and to verify financials. This takes about 3 or 4 months, after which the IRS/State will either accept or reject the OIC. If the OIC is rejected, it takes about 2 months to appeal the judgment.
What can I do about the tax liens?
Depending upon the size of the tax lien that's secured, the debtor can move to pay it off if he has, or can borrow, the funds. Sometimes this can be done by direct negotiation with the IRS/State to agree on the secured value of the lien.
Other times, the debtor may have to resort to bankruptcy options, such as paying off the value of the secured debt in a Chapter 13 plan. This also may require an action in court to determine the value of the collateral, and hence the equity to which the tax lien attaches. Sometimes a challenge to the validity of the lien may be available, if grounds exist, such as:
* The notice of tax lien was never recorded, although the IRS/State said it was.
* The notice was recorded after the automatic stay took effect.
* The notice was filed against assets that do not belong to you
* The lien was based on an invalid assessment.
* The lien expired. The life of the lien is ten years, unless re-recorded.
What if I can't pay all my back taxes at once?
Most people can't. This is, after all, why most of our clients are in the position they're in. It is our function to lower the amount of taxes owed and work out an affordable monthly payment, while at the same time protecting your assets.
What are my options if I can't reach an agreement with the IRS/State?
The IRS/State is always interested in reaching some sort of settlement with delinquent taxpayers. Keep in mind though; it's not their goal to make your life miserable by garnishing your wages and levying your bank accounts. It's to get you into compliance and collect as much money as they can, as quickly as possible.
What can I do about all the penalties and interest?
In some cases Crest Tax Group can argue for an abatement of all penalties and the associated interest. There has to be extenuating circumstances surrounding the reasons you accumulated the tax debt.
What do your services cost?
Our services vary in cost depending on the amount of work entailed in the case, type of resolution and whether or not you are in the collections process. Our initial consultation is free, and we won't take on your case unless we're confident we can reach a resolution you'll be happy with.
Why can't I just deal with the IRS/State myself?
Actually, you can attempt to resolve your tax issue yourself, but it is a very difficult process. First, there's the frustration of dealing with endless complicated forms and publications and long hold times with waiting for an agent. Then there's the issue of knowing how to negotiate with revenue officers. It's important to note that over 85% of offers are rejected by the IRS, simply because the average person doesn't understand the process. The professionals at Crest Tax Group have decades of experience handling all kinds of tax issues, so you can be assured we'll negotiate the best solution possible.