TAX LAW

 

At Hill & Bondani, PLLC, our tax law attorneys are pleased to advise our clients on matters of tax planning and tax controversy. Our firm offers services such as:

  • Planning for income, gift, and estate tax consequences;
  • Assistance in obtaining installment agreements, offers in compromise, and currently not collectible status;
  • Tax lien, levy, or garnishment relief;
  • Conducting tax research and drafting covered opinions; and
  • Tax audit defense.

We understand that the tax laws can be complicated and that the stress of dealing with government tax collection efforts can be overwhelming. If you have a tax law planning question or a tax collection problem, contact our Ponte Vedra Beach law office to speak with our tax advisers today.

Tax law assistance

 

Below are some common questions relating to tax law and the tax collection process. If you have any more detailed questions, please do not hesitate to contact us to see how we can assist you.

1. What is the IRS Fresh Start Initiative?

The Fresh Start Initiative is an IRS program which is designed to assist struggling taxpayers in settling their back tax debt. Under the program, certain taxpayers may receive easier access to settlement tools such as penalty relief, installment agreements, and offers in compromise. Federal tax lien release may also be easier to obtain if the taxpayer meets certain standards and fulfills certain obligations. The program may provide relief to both individual and business taxpayers.  

2. What are the requirements for obtaining an installment agreement from the IRS?

Under the Fresh Start Initiative, the qualifications for obtaining an installment agreement have been expanded. Installment agreements are divided into three tiers: (1) those who owe $25,000 or less, (2) those who owe $25,001 – $50,000 and those who owe $50,000 and above.

The criteria to qualify for obtaining a streamlined installment agreement with a balance due of $25,000 or less are:

  • The taxpayer must owe $25,000 or less, at the time the agreement is established. If the taxpayer owes more than $25,000, they may choose to pay down the liability before entering into the agreement in order to qualify.
  • The debt must be fully paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
  • The taxpayer must be currently compliant with all filing and payment requirements (and should remain so throughout the term of the agreement).
  • The agreement is available to individual taxpayers who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.); defunct businesses, including any type of entity and any type tax (Form 940, 941, 943, etc.); and operating businesses as to income tax liabilities only (Form 1120).
  • Enrollment of taxpayer in direct debit installment agreement may lead to tax lien release.

The criteria to qualify for a streamlined installment agreement with a balance due of $25,001 to $50,000 are:

  • The taxpayer must owe $25,001 to $50,000, at the time the agreement is established. If the taxpayer owes more than $50,000, they may choose to pay down the liability before entering into the agreement in order to qualify.
  • The debt must be fully paid within 72-months or prior to the Collection Statute Expiration Date, whichever is earlier.
  • The taxpayer must be currently compliant with all filing and payment requirements (and should remain so throughout the term of the agreement).
  • The agreement is available to individual taxpayers who owe any type of tax (Form 1040, Trust Fund Recovery Penalty, etc.) and defunct sole proprietors who owe any type of tax (Form 940, 941, 943, etc.).
  • The taxpayer must enroll in a Direct Debit Installment Agreement.
  • The taxpayer may be required to provide a limited amount of financial information during the application process.

Taxpayers seeking installment agreements for amounts exceeding $50,000 will still need to supply the IRS with full financial disclosure in the form of a Collection Information Statement (Form 433-A or Form 433-F).

10403. What is an Offer in Compromise?

An offer in compromise (OIC) allows a taxpayer to settle their back tax debt for less than the full amount they owe. An offer in compromise may be a legitimate option for those taxpayers who cannot pay their tax liability fully, or when doing so would create a financial hardship. When seeking an offer in compromise, the IRS considers the taxpayer’s individual circumstances for factors such as ability to pay, income, expenses, and total asset equity. During the pendency of an offer in compromise petition, collection activities must be ceased. If the offer is accepted, payments may be made either in a lump sum or in installments.

As part of the Fresh Start Initiative, the IRS has purportedly streamlined the offer in compromise program and has added flexibility to the financial analysis utilized in determining the adequacy of the offer. However, offers in compromise remain difficult to obtain in general and can be especially complicated if the taxpayer does not seek any professional assistance. These facts notwithstanding, some firms continue to advertise that the IRS consistently settles back tax debt for “pennies of the dollar,” leading the IRS to issue a warning to consumers about the legitimacy of such claims.

4 What is currently not collectible status?

The IRS may grant taxpayers currently not collectible status when they are found to be unable to pay their back tax debt. When currently not collectible status is granted, the IRS must stop all collection activities and efforts until such time as the status is removed. In order to receive currently not collectible status from the IRS the taxpayer must prove that they do not have any assets that would enable them to pay the back tax debt and that they only have enough money to pay for the very basic necessities of life. This is shown by the submission of a Collection Information Statement (Form 433-A or Form 433-F).  Currently not collectible status is subject to periodic review by the IRS in order to determine if the taxpayer’s circumstances have changed and their ability to pay has improved.