| IRS Debt Help: | | | | be an option. If a client is placed in CNC status, the |
| Do you owe the IRS? Are you struggling with IRS | | | | statute of limitations continues to run and the IRS will |
| debts and cannot figure out what to do? Don't despair, | | | | not pursue collection actions. However, if a taxpayer's |
| you are not alone. Many Americans owe back taxes, | | | | financial status improves, the IRS can remove the file |
| or cannot afford to pay their IRS debts. If you want to | | | | from CNC status and return to active collection status. |
| get IRS debt help, it's important to understand the | | | | Reasons for attempting CNC status: |
| different IRS tax debt strategies. | | | | 1. Taxpayer has income below allowable expenses |
| There are five strategies for getting out of IRS tax | | | | and there is no indication that the financial situation will |
| debt. | | | | improve in the future; |
| 1.Offer in Compromise: a program where you can | | | | 2. Due to high equity, the taxpayer does not qualify for |
| settle your tax debts for less than what you owe. | | | | an OIC and has more allowable expenses than income |
| Requires making a lump sum or short term payment | | | | so an Installment Agreement is not an option; and, |
| plan to pay off the IRS at a reduced dollar amount. | | | | 3. Taxpayer has more allowable expenses than |
| 2.Installment agreement: a monthly payment plan for | | | | income and the statute of limitations is getting close to |
| paying off the IRS. | | | | expiring. |
| 3.Partial payment installment agreement: a somewhat | | | | Statute of Limitation for IRS Tax Debt |
| new debt management program where you have a | | | | The IRS has 10 years to collect outstanding tax |
| long term payment plan to pay off the IRS at a | | | | liabilities. This is measured from the day a tax liability |
| reduced dollar amount. | | | | has been finalized. A tax liability can be finalized in a |
| 4.Not currently collectible: a program where the IRS | | | | number of ways. It could be a balance due on a tax |
| voluntarily agrees not to collect on the tax debt for a | | | | return, an assessment from an audit, or a proposed |
| year or so. | | | | assessment that has become final. From that day, the |
| 5.Filing bankruptcy: discharge your tax debts under the | | | | IRS has ten years to collect the full amount, plus any |
| strict rules of a Chapter 7 or 13 bankruptcy petition. | | | | penalties and interest. If the IRS doesn't collect the full |
| Offer in Compromise | | | | amount in the 10-year period, then the remaining |
| Many people who find themselves in debt to the IRS | | | | balance on the account disappears forever. The |
| might focus on the first option above - the Offer in | | | | statute of limitations on collecting the tax has expired. |
| Compromise ("OIC"). For those who qualify it can be | | | | Selecting a Tax Professional to handle your IRS Tax |
| the optimal solution, however, it is important to note | | | | Debts |
| that not everyone qualifies for the Offer in | | | | Because of the complexity of the Offer in |
| Compromise solution. Only about 15% of applicants | | | | Compromise and other IRS tax debt processes, many |
| succeed in reducing their debts through the OIC | | | | taxpayers hire a tax professional to prepare their IRS |
| program. For this reason and because of the | | | | documentation and to negotiate directly with the IRS. |
| complexity of filing an Offer in Compromise many | | | | Tax professionals charge anywhere from $1,500 to |
| people enlist the services of a Tax Professional who | | | | $6,000 or more for accurate and thorough IRS |
| has a track record of success negotiating with the IRS. | | | | representation. Because most of the IRS tax debt |
| This Tax Professional will not only be able to | | | | solutions involve negotiating with the IRS, your tax |
| determine if you are eligible to reduce your IRS debts | | | | professional should be admitted to practice before the |
| via an OIC but they will also assist you in navigating the | | | | IRS. You should be looking for a Tax Attorney, an |
| complicated IRS bureaucracy to achieve the desired | | | | Enrolled Agent (EA), or a Certified Public Accountant |
| outcome. | | | | (CPA) to handle your Offer in Compromise. The tax |
| An Offer in Compromise is a lengthy and | | | | professional must know about the laws governing IRS |
| time-consuming process. It takes most individuals | | | | collection of tax debts, how the IRS evaluates offers, |
| anywhere from 12 months to 24 months to achieve a | | | | and what all the options are for resolving tax debt |
| successful resolution on your offer application. Through | | | | problems. "Taxpayers should be looking for a tax |
| an Offer in Compromise, taxpayers agree to pay the | | | | professional with years of experience in IRS collection |
| IRS only the reasonable collection potential instead of | | | | matters, especially experience in dealing with revenue |
| the full amount of taxes owed. For some people the | | | | officers, the Automated Collection Systems division, |
| "reasonable collection potential" will be less than the full | | | | and the complex IRS process" according to Jim |
| amount of taxes owed - sometimes as little as 10%. | | | | Brown, the managing tax attorney with Freedom Tax |
| Installment Agreement | | | | Relief. |
| Many taxpayers cannot qualify for an Offer in | | | | Please be aware that even the most successful tax |
| Compromise, Statute of Limitations expiration, or | | | | professionals have lost Offer in Compromise cases, |
| bankruptcy relief but still seek resolution for their IRS | | | | so not every consumer looking for IRS debt help is |
| liability. In these cases, it may be possible to negotiate | | | | guaranteed the most savings. It is important to know |
| long term IRS payment arrangements. The IRS allows | | | | that your Offer in Compromise will be decided based |
| "structuring" five primary types of payment plans, or | | | | on your unique financial situation. If you do need IRS |
| Installment Agreements: Guaranteed Installment | | | | debt help, having a tax professional represent you |
| Agreements, Streamlined Installment Agreements, | | | | before the IRS will help ensure that all letters and |
| In-Business Trust Fund Agreements, Long-Term | | | | phone calls from the IRS are handled quickly and |
| Installment Agreements, and Installment Agreements | | | | professionally. But in the end, it is up to the IRS to |
| on Specified Balance Due Accounts. | | | | make a decision about your case. |
| Currently Not Collectible | | | | It is important to know that like death and taxes, your |
| If a taxpayer does not qualify for an offer in | | | | IRS tax debt issue will not simply vanish, so you should |
| compromise and cannot afford to pay an Installment | | | | seek help before the IRS escalates collection efforts |
| Agreement, Currently not Collectible (CNC) status may | | | | and/or you accrue additional penalties and interest. |