Updated: Oct 23, 2021
Debt SUCKS! It controls your life and wears you down.
When you owe the IRS they control your life. They tell you what you will pay them and when you will pay them. If you don't listen, they make you pay! They will put a lien on your property so they have first dibs to any proceeds on the sale. If that doesn't make you pay faster they will start to levy your bank account.
You worked hard for your money and even harder to be able to buy a vehicle and home. But now you have to lose all of that to the IRS, or do you?
I'm here to tell you that you don't have to lose it all and as a matter of fact you can reclaim your life starting today! Every week my team and I help taxpayers just like with no hope of beating their IRS debt make a deal or other arrangement to put their tax debt behind them.
So allow me to introduce to some and present to others...The IRS Fresh Start Program.
The IRS Fresh Start Program
The IRS Fresh Start Program was introduced to the world in 2008 by the IRS to help taxpayers struggling to pay their back taxes. The program is designed to offer tax payment alternatives to individual and business taxpayers.
The Fresh Start Program is a taxpayer-friendly as it gives taxpayers some breathing room and flexibility when facing tax problems. This does not mean that it is user-friendly. Some of the rules have most definitely been laxed but thresholds/stipulations are still changing and complex.
With that being said, if you are in serious tax debt ($20,000 or more) or your bank account has been levied, paycheck garnished, or you have a tax lien it may be time for you to look into the services of an enrolled agent or tax attorney. Bowens Tax & Bookkeeping Solutions helps clients with these complex situations by stepping into their shoes and fighting the IRS for them. If you’re interested in booking a call to see if Bowens Tax & Bookkeeping Solutions is a good fit to resolve your tax issues book a free no judgement consultation today at https://bookingbowens.as.me/taxrelief.
There is no one set of rules or qualifications, it depends on what method of tax relief you would like to qualify for. Today we’ll go over the one that is most publicized and talked about in the news, and Offer in Compromise (OIC).
Note: You may be thinking to yourself, “what is an offer in compromise?” Have you ever heard “we’ll settle your tax debt for pennies on the dollar!”? That’s an offer in compromise 😊 Where you are able to settle your tax debt with the IRS for less than you owe. We help our clients determine if this is the right path for them in our free consultations.
What is an Offer in Compromise?
An Offer in Compromise helps taxpayer’s to show the IRS that they don’t have the ability to pay and propose a payment amount and plan that would not make them suffer to financial hardships due to paying their back taxes. The amount to pay is much lower than the original amount of tax owed. Offers are only granted to eligible taxpayers.
An offer also protects taxpayers trying to get back on good terms with the IRS from certain consequences of late tax payments such as:
Tax Levy on your bank account
Tax Liens on your property
Seizure of Property
Possibly having to file bankruptcy
How to Qualify for an Offer in Compromise
The Fresh Start Program makes it easier to qualify but don’t be mistaken, you still have to share every bit of financial information with the IRS. They want to know EVERYTHING about your finances before giving you a deal where you pay them less than what you owe. Then they evaluate your IRS settlement application and make there decision.
Here are some keys to understand regarding the Fresh Start Offer-in-Compromise Program:
To qualify, the IRS will evaluate your income, expenses, assets, and ability to pay for my business owners this means your Income Statement, Balance Sheet, and Cash Flow Statement. So make sure these things are clean and in order. Not sure what I mean? Check out Understanding Your Business Financial Statements
The taxpayer must be current on tax return filings and payments
The taxpayer cannot be in an open bankruptcy
The offer must be paid in one of the following ways:
Lump sum cash payments, with the first payment being 20% of the offer, with the remaining balance, upon acceptance, paid in five payments or less.
Payment over extended period: Your first payment is paid with your application AND the taxpayer must continue paying monthly while the application is being considered, with the remaining, upon acceptance, paid out over a period of 24 months.
Note: If the Offer in Compromise is not accepted the payments made with the application will not be refunded. Instead they will applied to the tax debt.
The IRS will generally accept the offer made if it shows the most they can expect to collect within a reasonable period of time. They will not accept an offer if they believe the taxpayer can pay the amount owed in full as a lump sum or through a payment agreement. Before going through the trouble of filling out all of the paperwork blindly I recommend using the Offer in Compromise Pre-Qualifier tool on IRS.gov to see if you may be eligible for an OIC.
After You've Made Your Offer In Compromise
Dealing with the IRS is a waiting game. While you wait there are 2 common mistakes but rather simple mistakes that I have seen taxpayers make that will get your OIC rejected. You want to make sure that you avoid these at all cost! They will get your offer rejected every time. They are:
Incurring more tax debt (make sure that your withholdings are correct and/or your making your estimated tax payments!)
You don't file your tax return on time
Is the Fresh Start Initiative worth it?
I personally believe that it is worth it for taxpayers that need to be able to breathe. Any type of debt is stressful and dealing with the most aggressive collection agency, the IRS, is even more stressful! This program allows people who never saw a light at the end of the tunnel to win.
I'm interested in knowing your thoughts. Do you think the Fresh Start Initiative is as amazing as the commercials make it out to be or do you think that you'd be better off just selling your soul to the IRS?
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Timalyn S. Bowens EA is America's Favorite EA and Louisville's Tax Expert that will work hard to find a legal solution that is customized for you! As an Enrolled Agent licensed through the Internal Revenue Service Timalyn is able to fight the IRS for taxpayers in all 50 states.
When you are facing questions regarding your personal or business taxes, working with a professional makes all the difference. At Bowens Tax Solutions, we serve our Louisville-area neighbors by providing the tax services and knowledge needed to succeed. We are here to assist you with your tax issues and preventative care. Visit our website at www.bowenstaxsolutions.com for more information.