Offer in Compromise in Bethesda
& Finding an Offer in Compromise Lawyer
An offer in compromise is a tax resolution option for taxpayers who are struggling to pay their full tax liability to the Internal Revenue Service (IRS) or the Franchise Tax Board (FTB) in Maryland. This option is available for federal and state taxes in Bethesda, allowing taxpayers to settle their tax debt with a fast-track solution for less than the full amount owed. It’s a financial relief agreement that can help taxpayers gain control of their finances and get out of debt.
In Bethesda, an offer in compromise is a written agreement between the taxpayer and the tax authority (IRS or FTB) in which the taxpayer agrees to pay a lump sum or a payment plan that is less than the full tax liability owed. This agreement is considered a compromise because the taxpayer is settling their tax debt for less than the total amount while the tax authority is accepting a lower payment as satisfaction of the tax liability. This aims to help taxpayers who can’t afford to pay the full amount due while also providing the tax authority with an assurance that they are receiving some payment rather than nothing.
Offer Must Meet Criteria to Qualify
To be eligible for an offer in compromise in Bethesda, taxpayers must meet specific criteria, including:
- Being current on all tax filings and payments
- Being unable to pay the full tax liability owed.
- Additionally, the tax authority will consider the taxpayer’s income, expenses, and assets to determine their ability to pay. If the taxpayer’s financial situation has changed and they can now pay the full tax liability, their offer in compromise may be rejected.
Officially submitting an offer in compromise in Bethesda typically involves gathering financial information, including tax returns, pay stubs, bank statements, and other financial documents. This information is used to determine the taxpayer’s ability to pay and is submitted along with the offer in compromise form to the tax authority.
IRS Review of Offer: Accept or Reject
Once the offer in compromise is submitted, the tax authority will review the information and decide on the taxpayer’s eligibility and settlement amount. This process can take several months, and the taxpayer may be required to provide additional information or documentation during the review process. Eligibility considerations and the settlement amount are based on each taxpayer’s unique financial situation, so it is important to seek advice from a tax professional and attorney before submitting an offer in compromise. This can safeguard taxpayers from mistakes or additional liabilities if the offer in compromise is rejected.
If the offer in compromise is formally accepted, the taxpayer must make the agreed-upon payments and comply with any other conditions outlined in the agreement. This will involve making payments on time and in full to satisfy the tax liability. If the taxpayer fails to make the payments or comply with the terms of the agreement, the tax authority may rule them in default on the offer in compromise and pursue collection action, including wage garnishment or bank levy. An attorney can help taxpayers understand the implications of an uncompliant offer in compromise and can provide advice on how to best resolve their tax debt.
In Maryland, it is important to note that an offer in compromise is not a guarantee of acceptance, and there is no guarantee of the settlement amount. The tax authority will consider each offer in compromise on a case-by-case basis, considering the taxpayer’s specific circumstances and financial situation. It is also important to note that an offer in compromise does not reduce or eliminate tax liability for future years. However, this is a one-time solution for resolving a past year’s tax liability that can help taxpayers avoid further collection action.
Delia Law Can Help With Offer in Compromise in Bethesda, MD
At Delia Law, we specialize in resolving tax liabilities for taxpayers in Bethesda who have historically struggled to pay their taxes. Our team of experienced professionals can assist with the offer in compromise process, including gathering and submitting financial information, negotiating with the IRS or FTB, and ensuring compliance with the agreement. This is the most streamlined way for taxpayers to reduce their tax liability and achieve financial freedom under the supervision of our experienced attorneys.
Why You Should Always Consider Hiring a Tax Lawyer
With our expertise and experience in resolving tax liabilities, we can help you navigate the complex tax system and protect your rights throughout the process. We will gather all necessary information to determine your eligibility for an offer in compromise and negotiate on your behalf to reach a settlement that is in your best interest. We understand the nuances of the Maryland tax system and can adjust our strategies to best serve your immediate and long-term financial objectives.
If you are facing a tax liability and cannot pay the full amount owed, contact our Bethesda office and schedule a primary consultation to discuss your options. Let us help you resolve your tax debt and put your mind at ease for a brighter financial future.
Maryland-Specific Tax Laws
Maryland has a progressive tax system, which means the higher an individual’s income is, the higher the percentage they will pay in taxes. Maryland has special tax benefits for military retirees, lower income families, those paying for childcare, as well as for those aged 65 and older.
There are four types of taxes in Maryland:
- State income tax. The state tax rate for personal income tax begins at 2%. This is applied to anyone making under $1,000 per year in annual income. It increases up to 5.75% for anyone making over $250,000 annually. This is one of the lower state income tax rates in the United States.
- Local income tax. There is also a local income tax, which is levied by counties and cities. For convenience, these are withheld during income tax season by the state, and they vary based on the locality. For example, if you live in Allegany County, you paid a .0305 tax rate in 2021. This differs from residents of Baltimore County, who had a .0320 rate. It is important to note that this income is based on the county you live in, not where you work.
- Sales tax. With each purchase in Maryland of a good or service, a 6% sales tax is automatically applied. This does not include every purchase. Groceries, prescription drugs, and gasoline are a few examples of items not subject to sales tax. However, a business is required to collect a 9% tax on any alcoholic beverages sold.
- Property tax. You must pay property taxes in Maryland as well, and the tax rates vary by county. The average effective tax rate is 1.06%. While this might seem low, it is balanced by the high property values in the state. The median home value in Maryland is currently over $400,000 and varies based on proximity to the city of Maryland and other populated areas.