Duluth/Gwinnett CPA: Processing an Offer in Compromise Taught by Christian CPA
CPA Serving Atlanta GA & Beyond
If you have worked with your CPA and have determined that you are a good candidate to submit an Offer in Compromise, then it is time to begin addressing the many nuances and specific details required. Failure at any level to satisfy Internal Revenue rules and regulations can mean that the IRS will return the whole of your Offer and its many attendant documentation requirements. The details, forms and collaborating information for any sound Offer is both exhaustive and time consuming. Statistics of the acceptance rates of Offers are very low thereby illustrating both the difficulty in the processing of a successful Offer. Though I have seen no statistics to bear this out, I believe that most failed Offer attempts are for two predominant issues. Foremost, the IRS will not process an Offer in Compromise for a taxpayer who does not qualify. Thus it is critical to begin the process of the rules of determining who is and who is not a candidate. Secondly, Offers frequently fail for lack of a good understanding of all of the forms, procedures and documentation required. To gain a good understanding of the rules for qualifying for a proper Offer submission visit http://www.hiscpa.com/offer-in-compromise.html
Form 656 (The Offer in Compromise Form): This is the form the Internal Revenue has prepared for taxpayers to utilize to submit and document the Offer itself.
On the Offer in Compromise form is where a taxpayer lists their full name, address and Social Security number. If the Offer is being done in the business name then the corporation name, address and Federal ID/EIN number would be listed.
On the Offer in Compromise form you will need to delineate the specific type of tax for which you will be seeking abatement. Boxes are to be checked reflecting both the years/periods and class of tax for which you are seeking relief. Some of the more common categories designated are Form 1040/Personal Income Taxes, Form 1120/Corporate Income Taxes for an C Corporation, Form 941/Employers Quarterly Federal Tax Return and Form 940/Employer’s Annual Federal Unemployment (FUTA). There is also a section for Trust Fund Liabilities, which are those assessed against a responsible taxpayer personally for trust fund monies (dollars collected by a company “in trust” as an escrow agent for the IRS).
On IRS Form 656/The Offer in Compromise Form a taxpayer/tax advocate lists as to the reason for the offer. One of the options that a taxpayer can select is “Doubt as to Collectability,” which is signifies that the taxpayer has insufficient assets and income to pay the full amount. The other option that can be selected is “Effective Tax Administration” which was is an acknowledgment by the taxpayer that there are exceptional circumstances which would lead an examiner to consider the collection of such taxes as being unfair and inequitable. Under old Offer forms this box was previously referred to as “Doubt as to Liability” (i.e., you believe there are substantive reasons as to why you do not owe the tax). It is possible to check both boxes in this section, if applicable.
On the Offer in Compromise form a taxpayer documents their proposed payment plan. Generally speaking the IRS wants all of the Offer money when the Offer is accepted, but by tax law, the IRS can consider and accept a payment plan covering up to two years. IRS Offer rules require that with each Offer Form that a processing check should be enclosed along with at least 20% of the total amount being offered. The initial fees to be paid along with the forms are a critical and integral component of this process, and failure to pay these will ultimately result in your Offer being rejected.
On the Offer in Compromise form sets out the rules and procedures of the Offer confirming a taxpayers understanding that, as a condition of their Offer’s acceptance, that taxpayers have to remain in compliance with all of their tax filings and payments for five years after the Offer is approved and processed. Otherwise, these previously abated Offer monies, penalties and interest will be reinstated and collection efforts resumed.
On the Offer in Compromise form are where the taxpayer documents how the unpaid tax monies arose, where the funds will be procured to pay the Offer and the taxpayers signatures respectively.
Tax Problems, Liens, Levies and Garnishments dictate the intervention and level of service you will need from your CPA. Understanding the basis tenants of the Offer Process, its rules and guidelines will do much to ensure that you will help your case along the way. The IRS process is tedious, detailed and exhaustive. Having a CPA who is familiar with the process is your best protection to help your Offer to its successful completion. To read more about this process visit http://www.hiscpa.com/irs-representation.html
Written by John Dillard CPA of His CPA at 770 814 9304 and visit http://www.hiscpa.com/ (a Atlanta Christian CPA firm). At His CPA we march to the beat of a higher drummer where we put the “Golden Rule” to work each and every day by “Serving Him by Serving You…One Tax Return at a Time.”
We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Payroll Administration, Bookkeeping.
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