The IRS Offer in Compromise program is an effective way of reducing an individual's total tax debt when they meet certain qualifications. However, the IRS rejects a significant portion of these offers (currently, it is about 90%), while the granted taxpayer finds themselves paying the IRS too much money.
The following paragraphs will discuss a few tips to help you successfully prepare your Offer in Compromise and eliminate all of your tax issues.
Regardless of what your actual expenses may be, the IRS has policies in place limiting how much you can designate as living expenses. Sometimes the IRS will permit individuals to claim expenses exceeding the amount allowed by the national standards, but there will be times when they won't. When arguing for a higher amount, the taxpayer must present full documentation to prove why their expenses are, in fact, essential living expenses. Find out what the IRS considers to be ordinary and necessary. Furthermore, learn when you should utilize the IRS standards for calculating expenses, as this can sometimes be more advantageous than using your actual expenses.
Check out all the ways to minimize or exclude equity in assets. Don't overvalue your assets. Take full advantage of every available tax deduction opportunity and find out how to write off the majority of your business expenses. Learn the intricacies when claiming your mileage deduction or computing depreciation of cars. Compare the deduction using the actual expense method and the standard mileage rate to find out which will offer the best tax results for you. Understand the limitations of 401(k) withdrawals or taking loans and when the equity in income-generating assets will not be added to the future income stream of Reasonable Collection Potential (RCP).
Make full use of the Collection Statute Expiration Date (CSED), even if you have the ability to pay. If the full payment cannot be recovered through an Installment Agreement before the CSED, the IRS will definitely look at accepting your offer instead of gambling on it.
If your Offer in Compromise is rejected by the IRS, the first thing to do is look at why it was rejected. The problem will likely be with the income and expense tables the offer examiner prepared. Check if there is anything inaccurate or arguable, considering that the examiner may not have looked at each issue as deeply as they should have. At that stage, place whatever disputes you have on the table. This may be the difference between getting approved and going to appeal. You might also get an alternative solution through appeal.
The Offer in Compromise program may be your ideal route to taking care of your taxes owed, resulting in a fresh start with the Internal Revenue Service. But the process is complicated and very comprehensive, requiring great attention to detail and an understanding of several IRS regulations, procedures, and tax laws.
The aforementioned basic tips will get you on the right track; however, there are a number of other tricks involved in any OIC case. Learning this on your own can prove to be more expensive over time than you ever dreamed of. Plus, there are adverse consequences for sending in an inappropriate OIC. Expert representation from a tax lawyer will ensure that your Offer in Compromise has a higher chance of being processed and accepted.
Article Source: http://EzineArticles.com/expert/Anthony_E_Parent/1615792
Article Source: http://EzineArticles.com/8807800
by : Anthony E Parent
The following paragraphs will discuss a few tips to help you successfully prepare your Offer in Compromise and eliminate all of your tax issues.
1. Actual Expenses and IRS Standard Expenses
Regardless of what your actual expenses may be, the IRS has policies in place limiting how much you can designate as living expenses. Sometimes the IRS will permit individuals to claim expenses exceeding the amount allowed by the national standards, but there will be times when they won't. When arguing for a higher amount, the taxpayer must present full documentation to prove why their expenses are, in fact, essential living expenses. Find out what the IRS considers to be ordinary and necessary. Furthermore, learn when you should utilize the IRS standards for calculating expenses, as this can sometimes be more advantageous than using your actual expenses.
2. Asset Values
Check out all the ways to minimize or exclude equity in assets. Don't overvalue your assets. Take full advantage of every available tax deduction opportunity and find out how to write off the majority of your business expenses. Learn the intricacies when claiming your mileage deduction or computing depreciation of cars. Compare the deduction using the actual expense method and the standard mileage rate to find out which will offer the best tax results for you. Understand the limitations of 401(k) withdrawals or taking loans and when the equity in income-generating assets will not be added to the future income stream of Reasonable Collection Potential (RCP).
3. Collection Statute Expiration Date (CSED)/Statute Expiration
Make full use of the Collection Statute Expiration Date (CSED), even if you have the ability to pay. If the full payment cannot be recovered through an Installment Agreement before the CSED, the IRS will definitely look at accepting your offer instead of gambling on it.
4. Appeal if Your OIC is rejected
If your Offer in Compromise is rejected by the IRS, the first thing to do is look at why it was rejected. The problem will likely be with the income and expense tables the offer examiner prepared. Check if there is anything inaccurate or arguable, considering that the examiner may not have looked at each issue as deeply as they should have. At that stage, place whatever disputes you have on the table. This may be the difference between getting approved and going to appeal. You might also get an alternative solution through appeal.
Dealing with the IRS
The Offer in Compromise program may be your ideal route to taking care of your taxes owed, resulting in a fresh start with the Internal Revenue Service. But the process is complicated and very comprehensive, requiring great attention to detail and an understanding of several IRS regulations, procedures, and tax laws.
The aforementioned basic tips will get you on the right track; however, there are a number of other tricks involved in any OIC case. Learning this on your own can prove to be more expensive over time than you ever dreamed of. Plus, there are adverse consequences for sending in an inappropriate OIC. Expert representation from a tax lawyer will ensure that your Offer in Compromise has a higher chance of being processed and accepted.
Article Source: http://EzineArticles.com/expert/Anthony_E_Parent/1615792
Article Source: http://EzineArticles.com/8807800
by : Anthony E Parent
