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Options if I am unable to pay at the conclusion of audit

Offer in Compromise

It may be possible to negotiate an “Offer in Compromise” agreement with the taxing authority. An Offer in Compromise is a procedure where you approach a taxing authority and offer to pay them say 25% of the total amount due if they will forgive the other 75% due.

The cold hard truth is that only approximately 15% of the Offers in Compromises submitted to the IRS for example are accepted. However, if you qualify, you could be forgiven from a significant amount of your tax debt including penalties and interest. There are strict requirements that define who qualifies for these programs and thus not everyone will qualify.

The taxing authorities typically require a great deal of financial information to be submitted along with an offer and thus I recommended that you work with an experienced Tax Attorney or Certified Public Accountant who can complete and skillfully negotiate your offer. Most Offers are routinely rejected and must be appealed to get them accepted. Lastly, be prepared for the whole process to take up to two years to complete.

Installment Agreements

Most of the taxing authorities will allow you to spread your tax liability over a period of time and make monthly installment payments. Once an Installment Agreement has been agreed upon by the IRS, collection activities will stop. It is often beneficial to work with an experienced Tax Lawyer or Certified Public Accountant when negotiating an installment agreement because the IRS all too often will attempt to disallow or understate valid living expenses, in an attempt to maximize the installment payments you will be responsible for which may result in payments that are too high to manage.

Currently Non-Collectible Status

In situations where you cannot pay your tax debt, even with a payment plan, a tax professional may be able to persuade the IRS into declaring your tax debt as currently not collectible. This will temporarily stop IRS collection action, but you will receive occasional reminders that you still owe this debt.

Contact my office to schedule your reduced rate initial consultation to learn how I can assist with your individual tax law concerns.