Can you really settle your IRS tax debt with the Offer in Compromise option?
Have you seen the commercials on the television where a pitchman says that you can settle down your Federal tax bill for pennies? You might have been intrigued to know that it is finally possible to part with your unpaid Federal tax dues! But did you wonder about the authenticity of such commercials? Did you even think for a while whether or not it is actually possible to eliminate your tax dues? In a perfect world, you would have certainly parted with your tax bills but as you’re not living in a perfect world, it won’t be easy enough to let go of your tax bills but only in a situation where the taxpayer doesn’t have any asset or income to repay his tax debt, he would offer to settle his Federal tax debt. Just like you settle your credit card debt, you can also settle your IRS tax debt through the Offer in Compromise situation which is also known as the OIC.
Leveraging an Offer in Compromise to settle your Federal tax debt
With an enormous discount, it is possible to wipe out your tax slate clean. Only when you qualify for something that is known as OIC, the IRS will accept as little an amount as 1% of the total amount that you owe on the tax bill. Legally, it is not allowed that you can reduce your valid tax bill by the IRS. In recent years, only 25% of the OICs were accepted by the IRS but how will you know whether or not you qualify for an OIC?
Do you actually qualify for an Offer in Compromise?
You won’t be able to qualify for a deal with the IRS only when you feel the need to reduce your federal tax bills. In order to qualify for the OIC, you have to follow certain conditions like:
The condition only arises when there is some doubt regarding whether or not the IRS will be able to collect the tax bill from you, whether now or in the near future. This doubt is called “doubt as to collectibility” by the IRS.
Due to extremely dire financial circumstances, if the taxpayer has to go through economic hardship due to payment of the taxes, this would be inequitable or unfair. In such situations too, you will be able to qualify for Offer in Compromise.
The Offer in Compromise – How does this process work?
When you submit an offer to the Internal Revenue Service, this is a formal process as you can’t call them and tell them that you want to make a deal with them. The process includes a $150 application fee for filing an OIC, that you require attaching to Form 656. You might not require paying the fee when your monthly income is below poverty guidelines. If you offer the IRS to pay 5 payments within 5 months, you should send them minimum 20% of the offer along with the application. And in case you will take longer time to make the payments, you should pay the first installment with the offer. The IRS will check and scrutinize all such disclosures and then agree to the deal.
So, if you’re someone who is dreaming about consolidation of debt with regards to your federal tax debt, you will be highly disheartened. Tax debts can’t be consolidated. Either you pay them in full or settle them after taking into account the above mentioned criteria.
Categories: Federal Tax, Income Tax, State Tax, Tax Law Tags:
Lawyer accused of not paying federal income tax for 5 years
A former Whitehall prosecutor, Lumumba Toure McCord, has been recently indicted on charged that state that he failed to file federal tax returns or pay federal income tax for the past five years.
A federal grand jury indicted MCord, also known as Toure McCord, this week on five charges of his failure to file tax returns with the Internal Revenue Service (IRS).
The indictment stated that McCord, age 41, of 851 Kenwick Rd. D, made approximately $355,000 in gross income from the years between 2006 and 2010.
McCord was formerly the chief prosecutor for Whitehall in 2000 until he was fired that June after he was arrested on two charges of interfering with custody plans for this 2 year old son. The jury had found McCord not guilty of the charges; however, he was not reinstated to his job in Whitehall for reasons that were not presented to the public, although it is most likely because of the two charges for his interference of custody plans that he had with his son.
McCord has worked as defense attorney for a lengthy 10 years, and has represented quite a number of defendants, especially those in high-profile cases in Franklin County Common Pleas Court. Agents from the Internal Revenue Service have investigated McCord on the tax charges that are going against him. So far, there has not been a set date for McCord’s first appearance in a federal court.
Categories: Federal Tax, Income Tax, State Tax, Tax Evasion Tags: federal income tax, income tax, income tax evasion, tax evasion, tax fraud, tax law
Paying Taxes Has Its Use
There have been many instances where the rich were forced to leave their country of birth or ply to “escape” to countries with better tax laws. Tax abroad plays a huge role in where you ply your trade, whether it is acting, business or sport.
Ikea founder Ingvar Kamprad escaped his native Sweden for the country of chocolates Switzerland. He left his country of birth in the 1970”s due to the high taxes imposed by the Swedish Government, especially on those that earn a high income. The billionaire plans to return to Sweden later this year after the Swedish Government reduced their income taxes.
In Football, the English Premier League and French Ligue 1 attract some of the biggest names in the sport but the amount of tax paid on their income often play a huge role when star players are looking for greener pastures, with Spain and Russia having some of the lower income tax percentages.
Tax payer’s money has a number of uses. The rich are often the ones having to pay a lot more due to their sufficient income. The use of this money thus becomes even more important to the different countries, and it can be used to address a number of issues that the country may face at the time. It is not uncommon for residents of a particular country to jump ship to another country, and this practice won’t stop in the near future, with the worldwide economic crisis playing a huge role in people trying to have the least amount of tax deducted from their income.
Categories: Federal Tax, Income Tax, State Tax Tags: