ALG Tax Solutions founder A.J. Gross was interviewed on Lansing Fox 47. A.J. discusses settling IRS taxes for less.
IRS Offer in Compromise – 2 Parts
Settling IRS taxes for less is called an Offer in Compromise. The Offer in Compromise is composed of two parts.
1) Equity in Assets – Do you have assets with significant debt attached? Or you may have no assets at all.
2) Household Income – You do not have the money to pay the IRS. You barely have enough money to pay for your household expenses, business expenses, and other personal expenses.
If you can say yes to both parts then you may qualify for an Offer in Compromise. The IRS will work with you to settle your taxes for less. It is not uncommon for a taxpayer to owe $70,000 and get an offer for $1,000 – $5,000. You are done once you pay the tax settlement amount. The IRS will remove the rest of the balance from your account and remove all tax liens. You will need to pay all taxes on-time going forward. You have your fresh start! You will no longer lose sleep at night worrying about the IRS taking your income, home, or car.
Real IRS Case Examples
Read more tax settlement case examples
The case I mentioned in the video is an actual case. The client was a realtor and had not filed for several years. The client was in a bind because of the housing crash. The client could barely survive financially and decided to pay household bills before paying the IRS.
The IRS filed a few years of tax returns for the client. When the IRS files the tax return for you, the IRS does not give you any deductions. These tax returns generate the highest possible tax bill. The IRS then started the collection process and issued a levy. This forced the client to address the back tax issues.
We worked directly with the IRS on the client’s behalf. We filed all back IRS tax returns and removed the levy. The IRS processed the returns we filed. The client owed about $45,000 in back taxes. We submitted an offer in compromise for $1,000. The offer in compromise was assigned to an IRS Settlement Officer. We negotiated with the IRS Settlement Officer and agreed to $2,300. The client paid $2,300 within 5 months of offer acceptance and that is it! The IRS removes the rest of the taxes and the client has a fresh start.
IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.