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Offer in Compromise versus Partial Payment Installment Agreements for back IRS taxes-personal and business taxes

Today I was able to negotiate a partial payment installment agreement for a couple that owes over $140,000 in back civil penalty taxes (a trust fund taxed assessed against them for an old corporation which owed back payroll taxes) for $252 a month over the next four years (the time remaining on the collection statue).  The couple makes decent money, over $7200 per month which makes this a pretty decent deal for my clients.

Although this is not considered technically an Offer in Compromise, it does allow the taxpayer to "settle" for paying approximately $12,000 on over $140,000 of tax debt, a whopping savings of over 91.5% of the total tax debt (when you consider IRS interest which is compounded daily on the civil penalty taxes-personal income tax debt also accrues penalties, but the trust fund recovery penalty in itself is a penalty so only interests accrues on the account).

Now if my client comes up with around $12,000 or even a little less (by borrowing from friends or relatives for example) we could in the future still submit a formal Offer in Compromise which would mean the IRS would be paid much sooner and the debt would be removed from their record (and thus the tax liens would be released).   Of course the taxpayer would still need to make the $252 installment agreement payment while the Offer in Compromise is being worked (a process which could last several months).

In any event, the worst case scenario due to the expiring collection statute (10 years from when the tax is assessed), in this case my clients will end up paying approximately $12,000 on over a $140,000 tax debt, or 8.5% of the total tax liability.  Not too shabby.

If you need help with back taxes give me a call at 720.491.3531 or email nick@patriotresolution.com and remember stay away from ambulance chasers calling you due to a notice of federal or state tax lien filing!

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Keys to a Successful Offer in Compromise | Nicholas Hartney, EA | Genesis Tax Consultants, LLC ©

Keys to Unlock a Successful Offer in Compromise ©by Nicholas Hartney, EA © of Genesis Tax Consultants, LLC©*Updated Article 2018 Here
Contact me: Nicholas Hartney Licensed to Represent Taxpayers Before the IRS 
The Offer in Compromise is an agreement between a taxpayer and the IRS that settles the taxpayer’s liability for some amount which is less than the full amount due. The IRS has the authority to settle or compromise federal tax liabilities by accepting less than full payment under certain circumstances.


The taxpayer makes an Offer in Compromise on Form 656. If the IRS accepts the Offer in Compromise, then a contract is formed in which the IRS agrees to cancel the tax debt in return for the payment of the agreed sum. The IRS has a whole set of rules, policies and procedures which govern when it will accept an offer.


Unfortunately, you just don’t offer to pay them 10, 25, or 50 cents on the dollar. They look at your offer, compare it to their guidelines and then either accept it, rej…

2010 IRS Nationwide Tax Forum San Diego Review

The 2010 IRS Nationwide Tax Forum was nicely set up and had some great presentation speakers.


Some of the highlights discussed from the forum:
There were almost one million federal tax liens filed in 2009.The National Taxpayer Advocate's Office discovered that federal tax liens drop your credit score 100 points as soon as they are filed.  The investigation also found that the three major reporting credit agencies, Experian, Equifax, and Transunion, do not remove tax liens for years, if at all, even after the tax has been paid.  The Fair Credit Reporting Act allows the agencies to keep the lien on your credit report for up to 7 years after payment in full.  Regardless of this Act for some reason the investigation found that Equifax keeps liens on your report for up to 15 years, Experian keeps the liens on your report for 10 years, and TransUnion indefinently!  Federal Tax Lien filings went up 475% over the past 10 years.Bankruptcy on back taxes are dischargable in a bankruptcy 3 year…

Preparing IRS Form 1045 Tentative Carryback Application or Carryback Claim Net Operation Loss (NOL)

Preparing Form 1045 to apply a tentative carry-back loss is ridiculously complicated for most people.  Even seasoned tax prepares have difficulties preparing this form. 

If after you filed an amendment to your tax return (Form 1040X) and the IRS sends you a notice requesting that you now file Form 1045 you should consider calling someone for help!  I filed one of these forms back in June for a client of mine and just received notice that it was approved, lowering the taxpayer's liability down from $8492 to $2900.


You may want to contact me on this.


If you wanted to try to tackle the 1045 yourself here are the instructions:

Department of the Treasury
Internal Revenue Service 2010
Instructions for Form 1045
Application for Tentative Refund
Section references are to the Internal Definitions connection with gambling, the racing
Revenue Code unless otherwise noted. of animals, or the on-site viewing of
Eligible loss. For an individual, an such racing, and the portion of any
eli…