The IRS Offer in Compromise program is designed for people who, for whatever reason, are absolutely incapable of paying off their tax debt in full. It can be a powerful tool in helping you permanently eliminate your tax debt. If you owe back taxes to the IRS and you are unable to pay the debt in full, you may be eligible for this program.

It is vital to consult with a qualified tax professional first to analyze your current financial situation, previous tax returns and other records. By determining exactly how much you owe the IRS, you are ensuring that you’re not obligating yourself to pay even a penny more than what you owe.

Under this Offer in Compromise program, you and your tax professional can negotiate with the IRS a final settlement amount that will retire your tax debt once and for all. Oftentimes, this settlement amount to pennies of the dollar of your tax debt.

In this current economic downturn, the IRS has announced that it will be providing help to those Americans struggling to meet their tax obligations this year. This is a hard time for many Americans facing financial hardship, but with the IRS pledging to offer greater flexibility to troubled taxpayers, there’s a unique opportunity for Americans to get the tax help they need now to resolve their IRS debt.

Although you will want to discuss the particulars of your tax situation with your tax consultant, here are some things you will need to know about qualifying for the Offer in Compromise program:

Who can file an Offer In Compromise?

Any taxpayer may file: individuals, married couples, trusts, corporations, limited partnerships, limited liability companies, foundations, associations and other non-profit organizations and estates. In each instance, a duly authorized individual must sign the Offer in Compromise.

What are the requirements for an Offer in Compromise?

In order to be considered for an Offer in Compromise, a taxpayer must meet all of the following requirements:

* Used the most current version of Form 656, “Offer in Compromise,” dated February, 2007 and Forms 433-A and 433-B, “Collection Information Statements, ” dated January, 2008
* Submit the $150 application fee, and the 20% non-refundable deposit with Form 656 Offer in Compromise
* Filed all required federal tax returns
* Is not a debtor in a bankruptcy case.
* Taxpayers must comply with all federal tax filing and paying requirements for a period of five years following acceptance of their Offer in Compromise, or until the Offer in Compromise is paid in full, whichever is longer. This also includes making required estimated tax payments and federal tax deposits.

What is the most common reason for large tax liabilities that force taxpayers to file Offers in Compromise?

Large tax liabilities are generally caused by unpaid withholding (payroll) taxes. Owners and other responsible parties within a business are personally assessed the unpaid trust part, or taxes really deducted from the employees. This is called the 100 percent penalty assessment.

If business owners cannot pay the full withholding tax, they should at least pay the trust part -that amount withheld from employees-and designate that the payment be applied only to the trust part liability. The business will owe its share of the payroll taxes due, but its officers and other responsible parties will have no personal liability. Other common reasons for filing an Offer In Compromise include extensive audits, not fling for a number of years or tax shelter investments that are disallowed.

Can penalties and interest be compromised under an Offer in Compromise?

Yes. Penalties and interest can both be compromised in the same way as the underlying tax liability. In fact, in submitting an offer, you must include all owed taxes, plus penalties and interest, for your offer to be considered. But, if penalties are your major concern, then consider a penalty abatement, particularly if you have reasonable grounds for the IRS to waive the penalty. The abatement process is far simpler than an OIC, and it is your proper remedy when you can pay the tax, but believe you have justification for being excused from the penalties.

How likely is it that the IRS will accept an Offer in Compromise?

In the past, the chances of acceptance were poor-only about one in four. The odds of settling with the IRS are now far better because the IRS has liberalized its OIC policies. Taxpayers and their advisors, in turn, have also become more realistic in their offers to the IRS. A realistic Offer in Compromise now stands an brilliant chance of acceptance. If you closely follow the instructions in this product, you should have no distress reaching a honest and workable settlement with the IRS.

How long does it take for an Offer in Compromise to be approved by the IRS?

Generally, you must allow 6-12 months. If you case gets rejected and we take it to Appeals, it could take longer. But no matter how long it takes, a qualified tax professional can often negotiate to have all collection activities suspended.

Will an Offer in Compromise show up on my Credit Report?

A: No. Unlike a bankruptcy or credit card charge off, an Offer in Compromise does not get reported to the credit reporting agencies. An offer in compromise will not negatively affect your credit score. But, ignoring the problem will cause the IRS to file a notice of federal Tax Lien, with your county recorder, which WILL show up on your credit report.

For more information on submitting an Offer in Compromise or to get professional tax advice on reducing your IRS debt, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.

Vendors who offer a properly structured equipment leasing program are giving the customer a viable financing option. In addition,they are taking a major step to increase sales, market share, and profits. Yet it’s surprising how many companies will not provide a leasing program. Some say it’s because their customers have their own sources. Others say their customers pay cash. This mindset can be costly in a variety of ways. The largest problem is that it can drive the customer to the arms of your competition. Customers can view the vendor as a one-stop shop where they can both fulfill their orders and get the financing they need, rather than having to seek financing from a bank or other financial institution.

Some equipment suppliers do offer a leasing program, but give the customer a choice between several leasing companies for them to use. That may sound practical, but shopping deals with a multitude of leasing companies can really lower the chance of approval. If the customer chooses one of the leasing companies, and is subsequently declined, two negative actions may result. First, the credit inquiry lowers the customer’s credit score. Second, it will be clear this is a shopped transaction, and will make it more hard to get the credit approved. If it is approved, the lower credit score will cause the rate to be higher.

Establishing a sound relationship with one reputable leasing company is the best course of action for both vendors and customers for several reasons:

1. The relationship (allowing one leasing company to be involved) should result in lower rates for your customers, thereby making it more attractive to buy from you. If a vendor uses multiple companies and shops deals, they will not usually get the best rates.

2. Using one leasing company results in better pricing because of increased volume. Leasing companies make more money when deals come through referrals, rather than expensive marketing. The referral business is more profitable because it provides a steady stream of deals from clients who are looking to buy equipment now and need financing.

3. Because maintaining the relationship with the equipment supplier is critical to profitability, they will do everything in their power to keep the approval rate high and the lease rates low. These savings are passed on to the client.

4. The leasing company will also be more motivated and go the extra mile to fund the most challenging credits.

5. Because of economies of scale involved with large volume directed to the leasing company, the supplier is often entitled to referral fees of 1% to 2%, thus providing an additional income stream.

Utilizing credit control allows the vendor to maximize approvals while getting the best possible rates for clients. Leasing companies often spend a lot of money on marketing to increase their sales volume. With a vendor leasing program in place, the leasing company receives a steady flow of very similar clients who are seeking equipment now, and need financing. Since no additional marketing funds were incurred to get those clients,leasing companies pass on the savings by virtue of favorable pricing. Thus,the company’s customers benefit by enjoying lower financing costs as a result of its direct relationship with the leasing company.

Providing a lease option for your customers has tremendous advantages to everyone involved. Both the leasing company and equipment supplier will likely delight in increased profits and the customer can buy much needed equipment without a large down payment. Another advantage to the customer is that leasing allows them to easily upgrade their equipment package to a state-of-the-art level.

To set up a vendor leasing program, the financing company will typically expect the company to be in business for at least a year. It will review the stability of the business and its customers. Leasing is usually simpler to obtain than bank loans or letters of credit, even though there is a determination of risk to the finance company.

As discussed in Part I there are many astute property and share investors in Australia who often fail to ensure that the investment loan they take offers the best available features and most tax efficient investment loan structure for them.When considering an investment loan you should ensure that you maximise your investment loan and that the interest rate is competitive (but not necessarily the cheapest – do not sacrifice features for interest rate); you should take the investment loan on an interest only basis and apply any surplus cash you have to the repayment of your non-deductible (your negative gearing benefits are maintained); you should not mix your investment loan with your home loan debt because the Australian Tax Office requires that any additional repayments of principal to such a “mixed” account must be apportioned between the home loan and the investment loan (your negative gearing benefits on your investment loan will reduce as a result).Another feature that all investors should include in their investment loan is a separate capitalising investment line of credit. The line of credit should be for a 10 year term minimum and be interest only. The importance of a capitalising line of credit within your investment loan structure cannot be underestimated. By having such a facility including in the investment loan you protect yourself form unforeseen vacancies and expenses in relation to the upkeep of your investment property. In a recent private ruling issued by the ATO a taxpayer was provided with a favourable outcome when he sought confirmation from the ATO that where he held an investment loan and the rental income did not cover his investment expenses (interest, costs, rates etc) then he could capitalise interest on an investment line of credit where the line of credit was used to meet the shortfall between his investment income and his investment costs (interest on the investment loan being a large part of this. The taxpayer also had a home loan and advised the ATO in his private ruling application that he did not want to use his personal income to subsidise the shortfall (including the interest on his investment loan) that he was having to meet each month. Rather he sought to draw down on the line of credit within his investment loan facility to meet the shortfall and apply as much of his personal income to the repayment of his personal home loan debt.Under the line of credit he was not required to make any payments to the investment line of credit so the debt increased. The interest also increased with the result that the taxpayer could deduct the simple interest on the investment loan as well as the simple and capitalised interest on the investment line of credit. This delivered additional negative gearing benefits to the taxpayer while also saving him significant dollars on his home loan debt. By applying more of his personal income to repay personal debt he reduced his home loan term by 8 years and saved himself many thousands of dollars in the process.Make sure you include a capitalising line of credit within your investment loan structure – you have both protection (from vacancies, higher interest rates,unexpected costs) as well as the opportunity to increase your negative gearing benefits and reduce your home loan interest! Make your investment loan work for you and improve your investment return.

The Offer in Compromise program was established to grant tax debt relief to to people who cannot pay their taxes. An Offer in Compromise is not always the best option. It is vital to determine if the tax debt liability can be avoided at the audit, appeal, or tax court level. Additionally, there may be ways to avoid collection of taxes that re bettern than the offer in compromise, such as bankruptcy or waiting out he collection statute of limitations.

Late night television is full of people advertising services that promise to settle your tax debt for “pennies on the dollar.” These services are generally not attorneys, and are basically Offers in Compromise mills. They fill out the forms, regardless of the clients’ individual situation, and make an offer. These offers are often not accepted by the IRS. The IRS has even gone so far as to release a consumer alert advising taxpayers to beware of these “pennies on the dollar” claims.

If you reckon you may qualify for the Offer in Compromise program because doubts about the tax liability, doubts about their ability to pay the tax debt, or undue hardship involved in paying the tax debt, it is best to have an experienced and knowledgeable tax attorney help you present your arguments. The vast majority of offer in compromise filings are rejected by the IRS and the chances of a successful petition are much better with an qualified Offer in Compromise attorney on your side.

www.4taxhero.com

Duration : 0:9:5

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The Offer in Compromise program was established to grant tax debt relief to to people who cannot pay their taxes. An Offer in Compromise is not always the best option. It is vital to determine if the tax debt liability can be avoided at the audit, appeal, or tax court level. Additionally, there may be ways to avoid collection of taxes that re bettern than the offer in compromise, such as bankruptcy or waiting out he collection statute of limitations.

Late night television is full of people advertising services that promise to settle your tax debt for “pennies on the dollar.” These services are generally not attorneys, and are basically Offers in Compromise mills. They fill out the forms, regardless of the clients’ individual situation, and make an offer. These offers are often not accepted by the IRS. The IRS has even gone so far as to release a consumer alert advising taxpayers to beware of these “pennies on the dollar” claims.

If you reckon you may qualify for the Offer in Compromise program because doubts about the tax liability, doubts about their ability to pay the tax debt, or undue hardship involved in paying the tax debt, it is best to have an experienced and knowledgeable tax attorney help you present your arguments. The vast majority of offer in compromise filings are rejected by the IRS and the chances of a successful petition are much better with an qualified Offer in Compromise attorney on your side.

www.4taxhero.com

Duration : 0:9:5

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