Offer in Compromise in San Diego
& 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 California. This option is available for federal and state taxes in San Diego, 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 San Diego, 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 San Diego, 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 San Diego 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 California, 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 San Diego, CA
At Delia Law, we specialize in resolving tax liabilities for taxpayers in San Diego 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 California 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 San Diego 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.
California-Specific Tax Laws
California residents are subject to some of the highest taxes in the nation. The same applies to businesses operating in the state or people living outside of California but earning income from the state.
There are four main types of taxes in California:
- State income tax. For state tax in California, the tax rate for those filing as a married couple range from 1% to 12.3%, depending on the income bracket. If you make under $18,650, you are only required to pay 1% of your income in state taxes. However, the other end of the spectrum imposes a 12.3% tax rate on annual salaries of $1,250,739 or higher. There is also a 1% mental health service tax that is imposed on anyone making more than a million dollars a year.
- Local tax. At the local level, the amount you pay locally depends on the county and city in which you reside. There are a total of 58 counties in California, each with its own tax rate. For example, in El Dorado County, the tax rate is 0.25%, while in Orange County, the tax rate is also 0.25%, but with an additional 1.5% added in for local school taxes.
- Corporate tax. The corporate tax rate in California is 8.84%, which is higher than average nationally. These taxes are imposed on the majority of businesses, regardless of whether they are based in California or operate in the state.
Sales tax. In terms of sales tax, there is a statewide rate of 7.25%, which is again higher than average. However, some areas have rates as high as 10%. These taxes are generally imposed on retail items. Residents and shoppers of the state do get relief from sales tax on some essential items, such as no tax on groceries and prescription drugs, as well as reduced tax rates on clothing, prepared food, and over-the-counter medications.