Tax Negotiation in San Diego
& 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 San Diego 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 San Diego, 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 San Diego
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.
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.