The Internal Revenue Service’s (IRS’s) Automated Collection System, which is often called the Automated Collection Service or ACS, is the system used by the IRS to track information about taxpayers, specifically those taxpayers who owe past due taxes.  The ACS stores two primary buckets of information about a taxpayer.  First is information about follow up that has been performed with a taxpayer who owes delinquent taxes (e.g., phone calls placed to the taxpayer, messages left with the taxpayer, phone calls received from the taxpayer, letters mailed to the taxpayer).  Second is information about the taxpayer’s assets and liabilities, which is used in an effort to estimate how much money the taxpayer can afford to pay and how quickly on a balance due.

While an agent of the IRS is involved in any detailed discussions with a taxpayer about their situation and steps they can take to resolve issues related to back taxes due, the ACS drives the next steps in the follow-up process with the taxpayer.  This follow up is driven by a series of programmatic steps within the ACS, which have been pre-determined by the IRS based on experience to be most effective at getting an IRS agent in live contact with a taxpayer and in ultimately collecting the amount due.

Taxpayers who owe delinquent taxes have likely received notifications—both in writing and via phone calls—from the ACS.  If you have not experienced it already, you will likely soon see how thorough the IRS can be at following up with a taxpayer with reminders that they expect payment.  If the taxpayer continues to ignore these reminders, the IRS will escalate the process to seek a judgment against the taxpayer that can result in a garnishment of wages earned and a lien on the taxpayer’s residence.  However, remember that the IRS’s ultimate goal is to keep you in the tax-paying system.  If you are willing to work with them, there is room for them to establish a payment plan or perhaps accept an Offer in Compromise.  An Offer in Compromise is when the IRS accepts a lower amount of money from a taxpayer in lieu of full payment of past taxes due.

Should I work with a tax attorney when negotiating with the IRS?

Although the IRS may be willing to accept an Offer in Compromise or establish another type of payment plan with a given taxpayer depending on the taxpayer’s individual situation, the taxpayer’s inability to pay the full amount of tax due must be established in the eyes of the IRS.  Establishing this case often takes the knowledge of a professional such as a tax attorney who knows the tax law, the rights the law gives to taxpayers, and has experience in working with the IRS.

If you owe delinquent taxes to the IRS, complete the short evaluation found at http://www.offerincompromiselawyer.com/Tax-Relief.php and a tax attorney will review your situation free of charge.  The review is 100% confidential and there is no obligation.  If you owe past due taxes, it is not unusual for a tax lawyer to be able to work with the IRS on your behalf to negotiate an Offer in Compromise or other payment plan that reduces your tax burden.  Therefore, please seek help today.

If you are considering not filing your federal income tax return, you need to be sure you understand the repercussions first.  While the Internal Revenue Service (IRS) generally does not use the threat of a jail sentence to drive filing of federal tax returns, the IRS does take delinquent taxes seriously.  The IRS may garnish your wages or place a lien on your house.  In addition, there are other reasons for filing a return:

• It is your responsibility. The federal government of the United States relies on money collected through the federal income tax system to run the country.  By residing in this country and enjoying the benefits and freedom provided by the government, you have a responsibility to pay your federal income tax to help provide those benefits to society as a whole.
• It can reduce the amount of tax you owe. In cases where an individual does not file a tax return, the IRS can file a substitute return.  When the IRS files a substitute return, they do so with only the limited knowledge they have about your situation.  This may mean that the taxes you owe are based on a return that does not take into account the filing status and deductions that you are due.
• It stops the bleeding related to penalties and interest. As noted above, the IRS does take delinquent taxes seriously.  If you choose not to file your federal tax return and do not respond to the IRS’ inquiries regarding the matter, they will file suit in an attempt to obtain a judgment against you.  This judgment can include penalties and interest in addition to the actual tax owed.
• It is necessary to obtain any refund due to you. If you are owed a refund on your federal tax return, the only way to receive that refund is to file your tax return.

If you are considering not filing your federal tax return because you do not believe you can pay the amount of that you will owe, you should also remember that the IRS generally works with individuals who are up front about their financial situation.  It is in the best interest of the IRS to keep taxpayers in the system, so the IRS is generally willing to work out a payment plan or accept an Offer in Compromise.  As noted on the IRS’s web site at http://www.irs.gov/businesses/small/article/0,,id=104593,00.html, an Offer in Compromise is “an agreement between a taxpayer and the Internal Revenue Service (IRS) that settles the taxpayer’s tax liabilities for less than the full amount owed.”  So remember that you potentially have options in addressing your tax liability.

If you are considering not filing your federal tax return, should you hire a tax attorney?

At a minimum, you should have a tax attorney review your situation to get advice more specific to your circumstances.  A tax attorney understands federal tax laws and can answer your questions about your federal tax return and advise you of your rights.

Complete the short evaluation form found at http://www.offerincompromiselawyer.com/Tax-Relief.php and a tax lawyer will review your situation free of charge.  The review is 100% confidential and there is no obligation.  And remember: if you are considering not filing your federal tax return because you do not believe you can afford the tax amount due or for other reasons, you should seek the help of a tax attorney.  With the help of a tax attorney, it is not unusual to negotiate an Offer in Compromise or other settlement plan in which you pay less than the full amount of taxes owed.  So please seek help today.

You just received a letter or phone call from the Internal Revenue Service (IRS), and it indicates that the IRS is auditing your federal tax return.  What do you do now?  There are several steps you can take to address the situation:

1. Remain Calm. Approximately 1-1.5% of United States taxpayers are audited each year.  With over one million IRS tax audits each year, you are not alone.  Why did the IRS audit you?  There are a variety of reasons your federal tax return may have been flagged, but one of the most common reasons is a large number of deductions.  Does this mean that you did anything wrong?  No.  In fact, everything on your return may be fine and the Internal Revenue Service simply needs more information to confirm they are valid.
2. Plan to Respond. The IRS requires a reply to federal tax return audits within two months.  Without you providing a response, the IRS will likely rule against you.  Remember, the IRS generally considers that their position is correct unless you provide evidence proving otherwise.  Such a ruling could mean that you have to pay more taxes.  You may have to pay fines as well if you do not make the additional payment on time.
3. Read the Notice. The notification you receive should clearly state why the IRS is auditing your federal tax return.  It should also indicate how you should response (whether through the mail or in person at a local IRS office) and the date by which the response must be received by the IRS.  Finally, if the IRS believes that you owe additional money on your federal tax return, the notification will state the amount.
4. Obtain Professional Help. The tax laws can be complicated to understand.  Therefore, without appropriate training or tax advice, it may be difficult to understand if the IRS’s position is correct and what rights you have as a taxpayer.  This is where a tax lawyer or other professional who prepared your return can help.  They have the knowledge to guide you through the situation.
5. Write a Response. Whether you need to meet with an IRS representative in person or can provide our response in the mail, you should write up your response.  This allows you to organize your thoughts and respond in professional manner.  This written response should speak only to the concern noted in the IRS audit notification, as other facts may cloud the issue.  You should also keep original copies of your tax return documents and support, supplying only copies along with your written response.
6. Await the IRS’s Reply. Once you have responded to the IRS, they should contact you again, whether it is to indicate that your response has addressed the matter or that the matter is still in question.  If the IRS does need additional information, perform the steps noted above in response to the IRS’s request.

If you find after you have consulted a tax advisor or tax lawyer that you do owe additional money to the IRS, you should investigate an Offer in Compromise (OIC).  An OIC is a situation where the IRS accepts a lesser amount as payment for a tax liability in lieu of the full payment.  The IRS may accept an OIC in three situations:

1. Doubt to timely collection. The IRS does not believe you can pay the full amount owed within the legal period allowed for the IRS to collect the additional tax due.
2. Doubt the taxpayer actually owes the money. There is question to the amount of money owed because of a mistake by the IRS auditor or because of new evidence provided by you or your tax advisor or tax lawyer.
3. There is an unusual financial situation. The taxpayer is able to prove that payment of the tax would create an unfair economic burden.

Additional information about Offer in Compromise is available on the Internal Revenue Service’s website at http://www.irs.gov/businesses/small/article/0,,id=104593,00.html.

Do I need to hire a tax attorney?

If you have additional questions or need help from a tax attorney, complete the short evaluation form found at http://www.offerincompromiselawyer.com/Tax-Relief.php and a tax lawyer will review your situation free of charge.  The review is 100% confidential and there is no obligation.  Tax attorneys understand federal tax laws and can answer your IRS tax questions.  You have everything to gain by obtaining professional advice!  So get help in addressing your IRS audit today or establishing an Offer in Compromise!

Outstanding IRS tax debt can be settled using a variety of IRS tax settlement options. Offer in Compromise is one of the most popular of these options because it allows the taxpayer to potentially settle their IRS tax debt for a fraction of the full amount owed. Mississippi taxpayers who have federal tax debt can use Offer in Compromise to make an offer to the IRS. If the Internal Revenue Service (IRS) accepts the offer, it is considered a compromised settlement for all tax debt outlined in the Offer in Compromise agreement.

Up to 80% of first time OIC offers will be denied by the IRS. The IRS will however, generally be willing to negotiate to find an offer amount which is agreeable to both the federal government and the Mississippi taxpayer. The IRS prefers for all tax debt to be paid in one lump sum or with an installment agreement and will only accept an OIC if these two options are not possible. Penalties and interest will accrue on the federal tax debt while the Offer in Compromise is under review. If the Offer in Compromise is accepted, collection actions will cease and penalties and interest will stop accruing.

OIC is one of several IRS tax settlement options available for Mississippi taxpayers. It can be difficult to implement, expensive and time consuming. The IRS will need detailed financial information about the taxpayer and if the OIC is denied the IRS may use this information to continue tax collection. Mississippi taxpayers should contact a tax professional such as an enrolled tax agent, certified public accountant or tax attorney if they are considering Offer in Compromise.

Three types of Offer in Compromises:

Not all Mississippi taxpayers will receive an Offer in Compromise. The IRS will only accept an OIC if one of the following conditions is met:

1. Doubt as to Liability – If there is doubt as to the accuracy of the IRS tax the IRS may accept an Offer in Compromise. Errors can occur if the IRS administrator misapplied the tax law, made a miscalculation or if the taxpayer produces additional tax information which previously was not considered. This condition is seldom met.

2. Doubt as to Collectibility –  The amount of tax debt is not in question under this condition, only the ability of the IRS to collect the federal debt before the end of the statutory period. If the cost to collect the tax debt is considered too high the IRS may also accept an OIC.

3. Effective Tax Administration- Mississippi taxpayers who can prove paying their federal tax debt could cause a “hardship which is inequitable or unfair” may qualify for an Offer in Compromise. The elderly and the handicapped most frequently meet this condition.

Rejection of Offer in Compromise in Mississippi

The IRS does not accept most Offer in Compromise offers. If the Offer is not accepted the taxpayer may be able to negotiate with the IRS or the Mississippi taxpayer can make a formal OIC appeal. The IRS has been given sole authority by the federal government not only to collect taxes, but to decide if they will accept less than the full amount for payment. Mississippi taxpayers will not have any legal recourse against the IRS if their OIC is denied.

Written notice will be sent to the Mississippi taxpayer if their Offer in Compromise is not accepted. Denials are most often a result of a low offer. If the IRS determines the offer is too low they should be able to provide the taxpayer with an amount which is acceptable. If the IRS refuses to provide Offer in Compromise information to the Mississippi taxpayer, this information can be requested under the Freedom of Information Act.

Appealing an Offer in Compromise in Mississippi

The first step for the Mississippi taxpayer if their OIC is denied is to try and contact the administrator who reviewed the Offer in Compromise to find out if the IRS is willing to negotiate. If the IRS will not negotiate the Mississippi taxpayer can file a formal OIC appeal by sending a letter to the IRS within thirty-days from the date of the Offer in Compromise denial letter.

The Offer in Compromise appeal’s letter should include the following information:

• The social security number, full name, home address and telephone number of the Mississippi taxpayer.
• A statement from the Mississippi taxpayer describing the reasons for the OIC appeal.
• A statement outlining all of the issues the Mississippi taxpayer wants to negotiate.
• Information on the tax periods or years in question.
• Any evidence or a list of the federal tax laws which support the Mississippi taxpayer’s position.
• The Offer in Compromise appeal letter must be signed by the Mississippi taxpayer under penalty of perjury.

Mississippi taxpayers do not need legal counsel to file an appeal or complete the Offer in Compromise negotiations, but some taxpayers may prefer to have help from tax professionals who have experience with the process. Taxpayers who are seeking legal counsel must choose a tax professional which is one of the following: an enrolled tax agent, a tax attorney or a certified public accountant.

Completing an Offer in Compromise

Mississippi taxpayers must complete the following tasks for the Offer in Compromise:

• All OIC forms must be sent by the Mississippi taxpayer to the Internal Revenue Service.
• All financial information must be sent to the IRS. This may include: the Mississippi taxpayer’s employment records and vehicle information.
• All federal tax returns must be filed on or before the federal tax deadline for the next 5 years.
• Mississippi self-employed workers must file tax statements and make estimated tax payments each quarter.
• All IRS tax payments must be made by Mississippi taxpayers for the next 5 years.
• All Offer in Compromise payments must be made.
• Refunds will be applied to the Mississippi taxpayer’s debt for the calendar year that the OIC is accepted.

The Internal Revenue Service can cancel the Offer in Compromise if the Mississippi taxpayer fails to complete all the OIC requirements. If the OIC is cancelled, the full amount of the federal tax debt may be reinstated.

Offer in Compromise Forms

1. IRS Form 656- Offer in Compromise. Mississippi taxpayers must submit Form 656 and send it to the IRS. This form will help the IRS determine the taxpayer’s ability to repay their tax debt.
2. IRS Form 443 A- Collection Information Statement for Wage Earners and Self-Employed Individuals. Mississippi taxpayers must send Form 443-A to the Internal Revenue Service to provide them with more information about the taxpayer’s ability to repay their federal tax debt.
3. IRS Form 443-B- Collection Information Statement for Businesses. Mississippi taxpayers must complete this form if their business debt is part of their Offer in Compromise.
4. IRS Form 656-A- Income Certification for Offer in Compromise Application Fee and Payment. Form 565-A will only need to be filed by Mississippi taxpayers who are requesting an OIC fee waiver.