- March 13th, 2013
- John Dillard
- IRS Representation, Back Taxes, Offer in Compromise, IRS Tax Problems, Tax Advocacy
- 2 Comments
The first thing we look to do when we meet with a client is to work to get their old back taxes filed. As soon as the back taxes are filed and we have worked with the taxpayer to ensure their present tax obligations are current. Then we can begin to address working with the taxpayer and the IRS to see what can be done to either pay the taxes and interest in full, while requesting penalty abatement by showing/proving reasonable cause as to why returns/taxes were late paid. Frequently this winds up being the best obligation as many/most taxpayers do not qualify to have an Offer in Compromise accepted as the process is much more involved and restricted. However we have great success at both.
How to Submit an Offer in Compromise: Which Tax Forms to Use
If you have a large tax bill owed to either the IRS or Georgia, there is a tax process called the Offer in Compromise which may be well suited to help you get beyond the mountain of tax debt and to negotiate a fair and just settlement with the IRS. The process requires you to be current on all of your tax filings and payments, thus the Internal Revenue Service or Georgia will first need to be able to verify that all of your respective corporate and personal income taxes, payroll taxes, and sales tax reports have been appropriately filed. If you are a corporate taxpayer or have been a proprietorship and have a payroll, the IRS will need to be able to ascertain and confirm that you are current on these payments and filings as well. If you are doing an Offer in Compromise to the state of Georgia then having your payroll reports, income taxes and payments current as well as any applicable sales tax reports will also be a pre-requisite to submitting an Offer.
Submission of an Offer in Compromise. Filing of the Offer Form (Form 656), the Collection Information Statement for Wage Earners and Self-Employed Individuals (Form 433-A), and the Collection Information Statement for Businesses (Form 433B) are the core paperwork to be initially submitted with the Offer in Compromise. Attendant with this filing is wide host of required documentation which needs to be submitted with the Offer to validate the deductions claimed.
Form 656: Offer in Compromise. This form is the actual Offer itself. The Offer when submitted to the Internal Revenue Service needs to include a check for $150 along with a check for at least twenty percent of the amount you are proposing to settle your total outstanding taxes. On the Form you will also indicate how the balance of the monies will be paid after an Offer in Compromise is accepted. Generally the best option is to pay the balance within thirty days of acceptance of the Offer, although by law the IRS can extend a payment schedule for up to two years.
Form 433A: The Collection Information Statement for Wage Earners and Self-Employed Individuals. This form is used by all taxpayers who are filing an Offer in Compromise for tax monies, which they personally owe. Accordingly for all those who receive a paycheck with payroll withholding or have a business proprietorship will utilize this form to file along with Form 656. This form will list all of a taxpayers (and if a joint offer, their spouse as well) assets, liabilities, credit lines, insurance values, retirement plan balances, monthly cash inflow and outgo in accordance with prescribed IRS criteria. Attendant to the forms instructions there is a wide host of documentation which also should be attached including monthly pay stubs, bank statements, billings/statements, and proof of expenditures.
Form 433B: Collection Information Statement for Businesses. If you are submitting an Offer in Compromise for your business for either payroll taxes withheld and not paid or for unpaid income taxes if a C Corporation, then you will use Form 433B for the submission. This schedule will also list all of the assets and liabilities of the business along with a profit and loss showing the year to date profit for the current year. Most of this information can be obtained from the company’s internal books and records (i.e., their balance sheet and profit and loss). Details of where the company banks, account numbers, loans, loan numbers, offsetting balances, monthly payments are examples of the additional information which will also need to be supplied. Copies of items such as the last three monthly bank statements, open accounts receivable and accounts payable detail will also need to be provided.
Generally an Offer in Compromise will take at least a year to process and it is not a task you will want to take on without the skill of a good Atlanta CPA to guide you along the way.
www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Serving Suwanee, Lawrenceville, Snellville, Lilburn, Duluth, Norcross, Peachtree Corners, Atlanta, Gwinnett, Johns Creek, Roswell, Forsyth, Flowery Branch, Buford, Dunwoody, Grayson, Alpharetta, Roswell, Sandy Springs & Tucker as a Faith Based CPA
www.HisCPA.com A Christian CPA Firm in Duluth GA Proudly Offering Corporate and Personal Income Tax Returns, Offer in Compromise, Tax Advocacy, Tax Mitigation and Tax Compliance, Back Taxes, IRS Representation, IRS Appeals, IRS Collections, IRS Installment Plans & IRS Wage Levies