How Much Money will the IRS Settle For? How Much will a Taxpayer Settle in an Offer in Compromise?

The average amount that the IRS settles for in an offer in compromise is currently $6,629.  Sounds good, does it not? If only an IRS settlement was that easy, every taxpayer would be submitting IRS settlements, right?

These are the facts. In 2014, the IRS received 68,000 offers in compromise from taxpayers. The IRS accepted 27,000 of those settlement offers. The IRS accepted 40% of the settlement offers submitted.

FLAT FEE TAX SERVICE, INC.’S CLIENTS HAVE A 90% SUCCESS RATE 

The total amount accepted in all Offers in Compromise in 2014 was $179 million which is an average income tax settlement of $6,629.

The above statistics do not mean that a financially struggling taxpayer will settle with the IRS for that amount, or that there is a 40% chance your IRS settlement offer will be accepted.

The IRS uses a very specific and complicated formula in determining the settlement value of an Offer in Compromise and whether or not to accept or reject it.  Your success depends on how a taxpayer fits into the IRS formula.

The IRS Offer in Compromise program formula works like this:

  1. The IRS will figure out how much they think that a taxpayer can pay them every month in an installment agreement. They do this by asking for your pay stubs or, if you are self-employed, a recent profit and loss statement from your business.
  2. The IRS wants to know about your monthly living expenses.  Some of those expenses such as your housing and utilities, car payment(s) and food/clothing will subject to IRS limitations. The IRS calls these limitations Collection Financial Standards, often referred to as allowable living expenses. The IRS is trying to create more cash flow than the struggling taxpayer will actually have by limiting the expenses to amounts the IRS thinks are reasonable.

The taxpayer’s monthly income, minus the allowable living expenses, equals the taxpayer’s monthly cash flow.  The IRS is going to put a value on the cash flow for purposes of determining the Offer in Compromise settlement value.

If the taxpayer can pay the IRS the offered settlement within five months after acceptance, the IRS values your monthly cash flow by multiplying it by a factor of 12. $200 of monthly cash flow will equate to an offered settlement valuation of $2,400.

If the taxpayer is unable to pay the settlement in full within five months, the IRS will grant you 24 months payment terms. However, your monthly cash flow ($200/month in our example) would be multiplied by a factor of 24, increasing the settlement offer to $4,800. The IRS will give the taxpayer a discount for paying the IRS the offered settlement sooner rather than later.

After determining the value of the settlement offer, the IRS will then turn to a valuation of the taxpayer’s assets, and add that to the value of your cash flow.  How much is your “stuff” worth?  Your car, house, retirement plan?  Subtract any loans to arrive at equity, and in most cases, reduce that by 20% to get to your IRS valuation.

Add your cash flow (multiplied by a factor of 12 or 24) to your asset value, and you have your proposed IRS settlement amount.

The taxpayer’s success with an offer in compromise is based on a full understanding of the IRS investigative process into the income, living expenses and assets of the taxpayer. It is not a one size fits all situation. The amount of one taxpayer’s settlement has no bearing on the success of another taxpayer.  The IRS does not have a set percentage of settlement to the amount owed.  

The taxpayer’s settlement offer depends on convincing the IRS that your financial situation is dismal and that the IRS will never get paid after applying their internal guidelines.

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  1. Guided by our Christian Values is the reason we do not have client complaints.
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  3. Experienced IRS Income Tax Attorneys work directly with you.
  4. Stop, Remove, Release an IRS wage levy in one (1) day.
  5. 90% of our clients who have submitted an IRS Offer in Compromise has received a successful IRS settlement.
  6. Low, Affordable Fees. 10 to 12 months to pay our fees.
  7. Our Clients Receive Positive Results.

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Los Angeles IRS Income Tax Levy Help; California IRS Income Tax Garnishment; Stop Release Remove

LOS ANGELES TAXPAYERS, HAVE AN INCOME TAX DEBT?

CALIFORNIA TAXPAYERS, HAVE AN IRS TAX LEVY PROBLEM?

If a taxpayer does not take action to remedy back tax problems, the IRS issue a levy order and an employer will be legally obligated to garnish and seize a taxpayer’s paycheck until such time that either the income tax debt is paid off or the struggling taxpayer resolves the tax debt problem in some other way.

Unlike an IRS bank levy, a wage levy (garnishment) is continuous. In other words, an IRS income tax wage levy (garnishment) will not be stopped, released and removed by the IRS until such time that the tax debt is satisfied or resolved in some way.

Also, please note that states, like California, also issue wage garnishments to collect tax debt. In fact, the State of California Franchise Tax Board has a very proactive and aggressive program to collect any back taxes that the State of California is owed.

How an IRS Income Tax Attorney Will Help Stop an IRS Wage Levy

An IRS wage levy (also called garnishment) is the inevitable result of underlying back income tax problems. The purpose and goal of Flat Fee Tax Service, Inc. are to solve a struggling taxpayer’s income tax problem, once and for all. Our team of IRS income tax experts will take care of the wage garnishment in one (1) day.

The big picture solution will involve the resolution of the entire income tax problem. After the IRS levy is released, stopped and removed, our client will have a tax debt that still needs to be remedied.

Many taxpayers with an income tax problem, will have unfiled missing tax returns. Our team will make sure to get the taxpayer’s back tax returns are prepared and filed right away so that the taxpayer becomes compliant (rights are restored) with the income tax laws.  Our IRS Tax Attorneys will protect our client’s interests. Our clients will have reached a reasonable payment plan, be placed into Currently not Collectible status with IRS or, better yet, will reduce the income tax debt through an Offer in Compromise (IRS settlement).

If a taxpayer receives an enforcement letter from the IRS or the taxpayer’s employer informs them regarding a wage garnishment, it is important that Flat Fee Tax Service, Inc. be contacted immediately. You have a very short time frame (when is the next payday?) to take action to stop, release and remove aggressive IRS collection seizure. Our experienced IRS ax relief team at Flat Fee Tax Service, Inc. will take charge and have the IRS wage levy (garnishment) stopped, released and removed in 1 day.

STOP IRS LEVY IN 1 DAY

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IRS To Struggling Taxpayers – Let’s Make A Deal – Want A Fresh Start – Now Is The Time

Are you, a financially struggling taxpayer, at loggerheads with the IRS over a tax return(s) from years ago? Your delinquent tax debt may be weighing on your mind, causing you anxiety and sleepless nights, but there’s a way you can put the matter to rest for good.

Your Fresh Start Strategy: Make the IRS an offer it can’t refuse.

The technical name given by the IRS for such a settlement arrangement is an “offer in compromise” (OIC).

The IRS is willing to go along with a settlement deal, but it won’t budge on the procedures. You must submit a formal settlement which is called an Offer in Compromise.

The IRS Tax Relief Team at Flat Fee Tax Service, Inc. has a 95% success rate because we do not lie to our clients and give them false hope. Our IRS Tax Attorneys know what the IRS will accept as a settlement of your back tax debt.

Here’s the whole story: An Offer in Compromise settlement is an agreement between a financially struggling taxpayer and the IRS. A successful Offer in Compromise will settle for less than the full amount of back tax owed. If the liability can be fully paid through a normal installment agreement or other means, the taxpayer generally isn’t eligible for an Offer in Compromise.

You must be qualified and eligible. You, the struggling taxpayer, must have filed all tax returns, made all required estimated tax payments for the current year and deposited payroll taxes for the current quarter if he or she is a business owner.

An Offer in Compromise Settlement Is A Financial Formula.

The IRS will accept an Offer in Compromise settlement if the amount offered by the taxpayer is equal to or greater than what is termed, the “reasonable collection potential” (RCP).

The RCP includes the value that may be realized from the tax­­­­payer’s assets—such as real property, automobiles, bank accounts and other property—as well as anticipated future income (less certain amounts allowed for basic living expenses).

There Are Three (3) Reasons For An Offer In Compromise.

The IRS says it may accept an OIC based on three grounds.

1. Doubt as to Liability: This ground is only met when there is a genuine dispute as to the existence or amount of the correct tax debt under the law.

2. Doubt as to Collectibility: Doubt that the amount owed is fully collectible: Such doubt exists where the taxpayer’s assets and income are less than the full amount of the tax liability.

3. Effective Tax Administration: This occurs when there’s no doubt that the tax is legally owed and that the full amount owed may be collected, but requiring payment in full would create an economic hardship or be “unfair and inequitable” under the circumstances.

THE ONLY REASON THAT YOU NEED TO BE CONCERNED WITH IS:

DOUBT AS TO COLLECTIBILITY.

When submitting your Offer in Compromise (OIC) based on doubt of collectability, you must use the most current version of Form 656, Offer in Compromise.

Financial Statements: You will need to submit Form 433-A (OIC), Collection Information Statement for Wage Earners and Self-Employed Individuals, and/or Form 433-B (OIC), Collection Information Statement for Businesses.

When the IRS accepts your settlement offer, the IRS expects that you, the taxpayer, will have no further delinquencies and will fully comply with the tax laws. You will be required to file your taxes on time for five (5) straight years. If you owe the IRS any money ($), you will have to pay it with your tax return.

If you, the struggling taxpayer, doesn’t abide by all the terms and conditions of your successful Offer in Compromise settlement, the IRS may determine that your OIC is in default. If the IRS rejects your OIC, the taxpayer will be notified by mail.

Tip: The letter will explain the reason for the rejection and provide detailed instructions on how to appeal.

What does an Offer in Compromise cost?

Generally, a taxpayer must submit a $186 application fee for an OIC. Don’t combine this fee with any other tax payments. However, there are two exceptions to this requirement.

1. No application fee is required if the OIC is based on doubt as to liability.

2. The fee is not required if the taxpayer is an individual (not a corporation, partnership, or other entity) who qualifies for the low-income exception.

The latter exception applies if the taxpayer’s total monthly income falls at or below 250% of the poverty guidelines published by the U.S. Department of Health and Human Services.

Tip: You may choose to pay the offer amount in a lump sum or through installment payments.

GREAT NEWS!

GREAT NEWS

The IRS, in the past two (2) years, has expanded the Offer in Compromise program and has been accepting more settlements than ever before. The new rules for a successful Offer in Compromise are contained in the IRS Fresh Start Initiative.

NOW IS THE TIME TO SETTLE WITH THE IRS FOR LESS.

ARE YOU QUALIFIED AND ELIGIBLE?

Call Flat Fee Tax Service, Inc.: 1-800-589-3078.

GET OUT OF DEBT WITH THE IRS.

Flat Fee Tax Service, Inc. will stop an IRS Levy (usually in 2 hours) and prepare your Offer in Compromise settlement for $1900.00:

1. Initial Fee of $190.00
2. 09 Monthly Fee Payments of $190.00
3. Total For Work: $1900.00

NO ONE CAN BEAT OUR AFFORDABLE FEES, MATCH OUR EXPERTISE AND MATCH OUR RECORD OF SUCCESS.

NO ONE DOES IT BETTER.

Flat Fee Tax Service, Inc.:

1. No Client Complaints.
2. Accredited by the Better Business Bureau.
3. Maintain an A Plus Rating with the Better Business Bureau.
4. Experienced IRS Tax Attorneys will work directly with you.

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