Reasons for tax debt—a difference between tax owed and tax paid—can vary, but failure to pay taxes for any reason can result in your taxes due entering collections. Eventually, you could experience penalties, interest, and wage garnishment. If you’re a New York resident and are having trouble paying your taxes in full, consider you may wish to consider getting IRS offer in compromise tax help.
What Is IRS Offer In Compromise?
If you live in New York and are experiencing a higher than expected tax bill, the prospect of paying your taxes can seem daunting. Fortunately, the IRS offers a process by which you could potentially settle unpaid tax debt for a reduced amount. This official IRS relief program, known as an offer in compromise, allows you to make an offer that represents the maximum payment you can make.
The IRS uses several documents to determine your tax debt and personal financial situation before deciding whether to accept your offer. In general, according to IRS policy, it will accept the proposition that represents the maximum payment you can make before the statute of limitations ends. Arriving at the correct number to offer the IRS takes significant preparation as well as in-depth knowledge of your tax situation. Therefore, the assistance of a tax attorney is crucial.
How Does an Offer in Compromise Work?
Before you complete and submit an offer in compromise packet, you must ensure you have filed all past years’ tax returns. In addition, you must pay your current year’s estimated tax or apply for leniency due to financial difficulties. Then, to begin your IRS offer in compromise, you’ll need to complete each form in the Offer in Compromise Booklet.
The IRS will determine your ability to pay your taxes, depending on your income, assets, equity, and expenses. To qualify for an offer in compromise, one of these situations must exist:
- Economic hardship—the IRS must conclude that even if you are working 30 hours or more per week, paying your tax debt in full will cause severe economic hardship.
- Inability to pay in full—the IRS statute of limitations ends in 10 years. If you are unable to pay in full before then, the IRS may accept a partial payment.
- Questions regarding tax owed—if doubt exists regarding whether you owe tax debt, the IRS may accept partial payment instead of pursuing an audit.
Offer is Either Accepted or Rejected
If the IRS accepts your offer in compromise, you will be required to choose between a lump sum or periodic payments. In both cases, you’ll need to send a 20% down payment with your offer in addition to the application fee. The rest of a lump sum payment is due within five months, while periodic payments can be spread over six to 24 months.
If your offer is rejected, you’ll need to submit an additional application fee with each attempt. As a result, careful completion and review of your packet are crucial. Any mistakes, omissions, or an offer that is too low can result in rejection and cost you more money. Utilizing offer in compromise help from an experienced tax attorney is the best way to increase your chances of success.
Do You Need Offer In Compromise Help?
Delia Law Can Help Increase Your Chances of Success
If you live in New York, Delia Law can help you with your offer in compromise as a potential solution for you. This official tax relief tool from the IRS allows you to settle tax debt for a reduced amount without exposing your personal information to tax consolidators or CPAs. As noted above, however, ensuring your packet and offer are completed correctly saves you money and increases the odds the IRS will accept your offer.
Delia Law is a firm of experienced New York attorneys with essential knowledge and insight regarding the offer in compromise process. Our team can assist you in preparing, filing, and making your offer as well as beginning repayment when the time comes.
Why You Should Use a Tax Attorney
Professional assistance for an offer in compromise in New York is essential for a successful offer. An experienced tax attorney can perform many functions during the pre-application and application processes. Your attorney can help you complete the IRS forms, gather accompanying documentation, and make an offer that reflects your financial situation.
In addition, your attorney can assist you in applying for an exemption from application fees if you are experiencing financial difficulties. When payment time comes, an attorney can help you choose your payment option. Overall, consulting a professional tax attorney like the attorneys at Delia Law can improve the quality of your offer and make you more able to utilize this vital form of relief.
About New York Tax Laws
For those living in New York, it’s essential to learn a bit about New York tax laws—and what other tax liability you may have—before deciding to pursue an offer in compromise. Like most other states, you’ll pay New York income taxes on each paycheck. It is crucial to ensure your withholdings are correct at the beginning of each tax year; if not, you may owe interest and fees or encounter a larger than expected amount owed.
Unfortunately, New York has some of the highest taxes in the country—between 4% and 8.82%. If you do encounter a larger than expected tax bill and cannot pay the full amount by the due date, continue to file your return and pay what you can. Once your return is processed, you’ll receive a notice of balance due.
Within the same tax year, you can request a payment arrangement for the remaining amount, known as an Installment Payment Agreement. You can make monthly payments for as many as 36 months if your amount due is under $20,000. However, you’ll continue to accrue penalties and interest on the amount due.