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Negotiating Tax Settlements
Large sums of back taxes can be overwhelming, but they don’t have to be imminent. The IRS is willing to negotiate reductions in tax debt in certain situations, as well as set up payment plans.
Wiggam & Geer tax attorneys are experienced at advising and representing clients through settlement negotiations to achieve the maximum tax debt relief for each individual.
Offer in Compromise
If you have a large outstanding tax debt and have not filed for bankruptcy, you might be eligible to settle for a lower payment amount by entering into an Offer in Compromise (OIC) with the IRS.
An OIC is an offer to compromise with the IRS on the amount of back taxes you are capable of paying. The IRS will ask you to prove that either you cannot pay all of your back taxes or by paying the entire amount you would be put in financial hardship.
During the negotiation and investigation process, the IRS will look at your ability to pay, as well as annual income, expenses, and net equity in assets. You must be up to date on past returns, current on quarterly estimate payments, and financially solvent enough to pay future taxes for the next five years.
The OIC settlement process involves not only an application with substantial back up, but also an IRS investigation into your finances that can last from months up to over a year.
Another way to lower or completely discharge back taxes is to file bankruptcy.
In a Chapter 13 bankruptcy setting, your IRS debt is reviewed in bankruptcy court along with other debts. In most cases, you will negotiate a payment plan. Depending on the facts and circumstances of your case as well as the age of your tax debt, you could end up with a discharge of certain federal back taxes. Inclusion of tax debt in a Chapter 13 bankruptcy discussion is not automatic. You must have met certain IRS criteria as well as continue to file tax returns and pay current taxes due during the bankruptcy period.
If filing Chapter 7 bankruptcy, total discharge of back income taxes as well as interest and penalties is more likely provided you meet certain IRS criteria.
Partial Pay Installment Agreement
In a Partial Pay Installment Agreement with the IRS, a taxpayer negotiates a lower overall tax debt to be paid in installments.
As with an OIC, the IRS looks at your finances and equity in assets and requires past returns are filed and estimated payments made. The IRS wants a complete enough picture of your finances to ensure you cannot pay your entire tax debt but will be able to make your payments. The investigation and negotiation process can take from months up to over a year.
If you have a large tax debt that you cannot pay, it is best to seek the advice of an experienced tax attorney before filing for an Offer in Compromise, negotiating relief of tax debt in bankruptcy, or applying for a Partial Pay Installment Agreement.
The Atlanta tax attorneys at Wiggam & Geer can help you through the process and negotiate the best and lowest settlement possible. We are here to protect our clients and their assets. Contact us today to schedule a consultation.