Tax Negotiation in New York City
& Finding a Tax Negotiation Lawyer
Tax negotiation is the process of resolving tax disputes with the Internal Revenue Service (IRS). The IRS will sometimes agree to lower the amount of taxes owed, interest, and penalties. This is only offered in certain cases and usually when the taxpayer can prove they would be unable to pay the full amount. While the IRS does have the authority to negotiate, they are not required to, and it is up to the taxpayer to prove that negotiation is warranted in their case.
An offer in compromise (OIC) is one type of tax negotiation. This is an agreement between the New York taxpayer and the IRS to settle the debt for less than what is owed. To qualify, the taxpayer must prove that they are unable to pay the full amount and that the offer is the most the IRS can expect to collect. The IRS will also consider the taxpayer’s ability to pay, income, expenses, and asset equity when deciding on an OIC.
Another type of negotiation is an installment agreement. This is an agreement to pay the taxes owed over time in installments. The taxpayer must first determine if they are eligible for an installment agreement. If they are, they will need to fill out a form and submit it to the IRS. The IRS will then review the form and decide on the payment plan.
It is important to note that the IRS does not have to agree to any type of negotiation, and they may only offer certain types of negotiation options. If the taxpayer is unable to negotiate a lower amount, they will be responsible for paying the full amount of taxes, interest, and penalties they owe.
If you are selected to negotiate, the process will go as follows:
- You will be contacted by the IRS to begin the negotiation process.
- You will need to provide documentation to support your case for negotiation.
- The IRS will review your documentation and decide whether to proceed with the negotiation.
- If the IRS agrees to negotiate, they will make an offer.
- You can either accept or reject the offer.
- If you accept the offer, you will be responsible for paying the negotiated amount.
- If you reject the offer, you will be responsible for paying the full amount of taxes, interest, and penalties you owe.
The negotiation process can be complex, and it is essential to seek an attorney for help. An attorney can:
- Determine if you are eligible for negotiation. Attorneys know the IRS requirements for each type of negotiation and can help you determine if you are eligible. This can save you time and energy in the negotiation process while also preventing you from being rejected outright by an avenue for financial relief that does not apply to your case.
- Gather the necessary documentation. To be successful in negotiation, you must provide the IRS with certain documentation. This includes financial statements, bank records, and proof of expenses. Attorneys can help you gather the necessary documentation and put together a strong case for negotiation.
- Submit the offer in compromise. Once you have gathered the necessary documentation, your attorney can help you submit the offer in compromise to the IRS. This form contains a lot of financial information, and it can be difficult to fill out on your own. An attorney can help make sure the form is completed correctly and that all required information is included.
- Negotiate on your behalf. Negotiating with the IRS can be difficult and stressful. Attorneys can handle the negotiation process on your behalf. They know how to effectively communicate with the IRS. This can take a lot of stress off your shoulders and increase your chances of obtaining a favorable outcome.
- Appeal the decision. If the IRS rejects your offer in compromise in New York, you have the right to appeal their decision. Attorneys can help you navigate the appeals process and increase your chances of a successful outcome. They will review the initial decision to look for any errors, and they will put together a strong case for why the offer in compromise should be accepted in the second round of review.
Delia Law Can Help You Negotiate With the IRS in New York
At Delia Law, our tax attorneys have extensive experience helping clients negotiate with the IRS. We understand the strict and complicated rules the IRS has in place, and we know how to navigate them delicately to help our clients achieve the best possible outcome.
If you owe back taxes, interest, or penalties to the IRS and you need help negotiating, we can assist you. Contact us today to schedule a consultation with one of our experienced tax attorneys. We will review your case and help you determine if negotiation is right for you.
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.