While there is no specific formula that can give you a one hundred percent chance of having the Internal Revenue Service (IRS) accept a settlement offer you make for your federal income tax liability, there are steps you can take to ensure your offer is not immediately rejected. The IRS has specific criteria they evaluate about a taxpayer’s situation before they even consider the details in a settlement offer, so if you are planning to submit a settlement offer, you need to start by nailing down these basics:
Submit your taxes. If you have not at least filed your taxes, whether for the current tax year or any prior tax years, the IRS will not consider any settlement offers from you. From the IRS’ perspective, if you are not at least making an attempt to stay within the tax system, and the IRS considers you filing your tax returns an integral part of this, then the IRS has no reason to be sympathetic to your situation and is not willing to even consider your settlement offer.
Begin making settlement payments. Even though you are submitting a settlement offer to the IRS, remember that you do owe the IRS your full tax liability for the moment. While the IRS is considering your offer, they expect you to begin to make settlement payments according to your plan against this tax liability. You may not have to pay the full tax liability if the IRS accepts your settlement offer. However, while the IRS considers your offer, their perspective is that if you are not willing and able to adhere to the payment schedule you are proposing from the start, the IRS will assume you cannot follow the terms throughout the entire process and they will reject your settlement offer.
In addition to the above basic principles you need to get right for the IRS to consider your settlement offer, there are additional key components within the offer itself that are deal breakers from the IRS’ perspective:
Complete the required forms in full. The IRS provides forms specific to each type of settlement offer. If the correct forms are not completed in full and submitted with the required fees, the IRS may reject your settlement offer even if you have a legitimate need worthy of consideration and acceptance.
Maximize your offer. Since you are attempting to minimize the amount you pay to the IRS to settle your tax liability, it can be tempting to submit a low-ball settlement offer. Before you do this, remember that the IRS requires documentation proving that paying your tax liability in full would create an undue financial hardship or that otherwise proves you have a legitimate reason to make a settlement offer. If your offer does not reasonably reflect your ability to pay, the IRS will reject your offer.
Can a tax attorney help me in preparing a settlement offer to the IRS?
Yes, a lawyer will know the methods the IRS makes available for taxpayers to make settlement offers for their income taxes and the things the taxpayer can do to increase the likelihood that an offer will be accepted. Depending on your individual situation, it can make a significant financial different when you compare what you would pay the IRS if they accept your offer against what you would pay the IRS if they do not accept your offer. Therefore, you should complete the short form below to increase the chances that your offer will be accepted by having a tax attorney review your tax situation. You have nothing to lose by completing the form and getting this review, since the review is 100% confidential and does not obligate you to anything further. Please get the help you need today.