Georgia
Tax Attorneys

Offers in Compromise

According to the Internal Revenue Service (IRS), individuals have the option to settle their tax debts for less than the full amounts owed through offers in compromise. When considering an offer in compromise, the IRS takes into account factors such as the person’s ability to pay, income, expenses, and asset equity.

Offers in compromise are typically approved by the IRS when the amount offered represents the maximum amount the agency can reasonably expect to collect over a specific period of time. To be eligible for an offer in compromise, individuals must have filed all required tax returns, made necessary estimated payments, not be involved in an open bankruptcy proceeding, possess a valid extension for the current year return, and have made tax deposits as an employer for the current and past two quarters before applying.

In cases where the IRS is unable to process the offers in compromise, the agency will return the application and offer application fee. Any offer payment included will be applied to the balance due. Payment options for offers in compromise can include a lump sum cash payment of 20 percent of the total offer, followed by payment of the remaining balance in five or fewer payments. Alternatively, individuals may choose periodic payments, making monthly installments towards the balance.

Individuals who meet the low income certification guidelines are exempt from submitting the application fee, initial payment, or monthly installments while the IRS reviews the offer. If an offer in compromise is rejected, individuals have the right to appeal within 30 days using the Request for Appeal of Offer in Compromise (Form 13711PDF). The IRS Independent Office of Appeals also provides additional assistance in such cases.

IRS Audit Defense

Tax liens are legal claims imposed by the government on a person’s property when they neglect or fail to pay their tax debts. These liens serve as a means for the government to protect its interest in various types of assets, including real estate, personal property, and financial assets. In Georgia, the Department of Revenue clarifies that state tax liens, also referred to as state tax executions, are officially recorded with one or more Clerks of Superior Court to establish them as public records and ensure the collection of outstanding debts.

The IRS website provides detailed information about the process of releasing liens, and the agency is obliged to release levies under specific circumstances. These circumstances encompass instances where the individual has fully paid the amount owed, the collection period expired before the levy was issued, releasing the levy would enable the person to meet their tax obligations, the individual has entered into an Installment Agreement that does not permit the levy to continue, the levy would result in an economic hardship preventing the person from meeting their basic living expenses, or the value of the property exceeds the amount owed, and releasing the levy would not impede the IRS’s ability to collect the outstanding debt.

People maintain the right to appeal if the IRS denies their request to release a lien. Given the intricate nature of tax liens, seeking legal assistance is strongly advised, as most individuals may lack the requisite knowledge and understanding to navigate such matters independently.

Innocent Spouses

If a joint return is filed and the couple is still married and living together in the same household, there is a possibility of qualifying for innocent spouse relief. Innocent spouse relief is designed to help individuals avoid being held responsible for additional taxes when their spouse has understated the taxes due on their joint tax return and they were unaware of the errors.

In cases of underreported taxes, the responsibility lies with only one spouse, and this allocation of the underreported tax should be documented in an audit report. The filing spouse must demonstrate that they had no actual or constructive knowledge of the understatement, and it would be unjust to hold them accountable for the tax debt.

It is important to note that innocent spouse relief must be pursued within two years of an IRS collection action. However, obtaining innocent spouse relief can be challenging, which is why seeking the assistance of a tax lawyer is highly recommended. A tax lawyer can provide valuable guidance and advocacy to help navigate the complex process of seeking innocent spouse relief.