Offer in Compromise in New York City
& 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 New York. This option is available for federal and state taxes in New York City, 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 New York City, 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 New York City, 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 New York City 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 New York, 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 New York City, NY
At Delia Law, we specialize in resolving tax liabilities for taxpayers in New York City 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 New York 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 New York City 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.
New York-Specific Tax Laws
New York residents are required to pay taxes on income that was earned as well as for federal taxes. In fact, some people who don’t even live in New York must pay state taxes. If you lived elsewhere but acquired the money through a source in New York, you must pay state taxes on that income.
There are four main types of taxes in New York:
- State income tax. New York State has a graduated income state tax, which means your tax rate increases as your income increases. The state’s tax rates range from 4% to 10.90%. For example, if you make under $8,500 annually, you will only be subjected to a 4% tax rate. However, if you make $25,000,001 and over, you are now facing the higher end of the state’s tax bracket at 10.90%.
- Local tax. The local tax is a county-specific tax, and the rates also differ based on income. For example, in Tompkins County, the local tax rate is 4%. In contrast, in Suffolk County, the rate is 4.25%. The variation in local tax rates can make a significant difference in the overall amount of taxes you owe.
- City tax. City taxes are only applicable to those who live or have earned money in New York City. This applies to individuals, trusts, estates, partnerships, S-corporations, and corporations. The city tax rate is 3.078%, 3.762%, 3,819%, and 3.876% depending on the bracket your income qualifies for.
- Corporate tax. If you are a business owner, you are also required to pay corporate income tax. The tax rate on your corporate income ranges from 6.50% to 7.25%. These taxes generated from businesses is one of the main sources of revenue for the state of New York, and it helps to fund many of the state’s programs and services that benefit its residents.