Have you received a tax bill, and don’t think you can pay it – or don’t think you owe it? In New York, the tax department offers a compromise option. If you don’t think you can pay the full tax bill, an offer in compromise lawyer can help you avoid undue economic hardship.
There are two types of offer in compromises. The first type of offer in compromise is where the liability is final. The liability isn’t subject to administrative, or judicial reviews of any kind. This type of liability is subject to New York tax department collection activity. A liability is subject to collection activity if the taxpayer has exhausted his, or her, appeal rights, and has failed to appeal the assessment. Collection activity can include tax warrants, levees, and garnishments. The tax department will look at the solvency of the taxpayer when deciding whether to accept an offer. The NY tax department will also settle with taxpayers who can prove that the collection in full will result in undue economic hardship. This means a taxpayer cannot pay for basic living expenses. Basic living expenses can include things like your healthcare bills, welfare, and paying for basic expenses for your family.
The second type of offer in compromise is for a liability that is subject to administrative review. The tax department cannot undertake collection activities for liabilities which are still subject to a New York State administrative review. The taxpayer has the right to appeal these types of liabilities. The tax department will consider offers which are subject to admin reviews if there are doubts to the liability.
The New York tax department will also settle with individuals who are still subject to administrative review if it can be proven that collection of the tax in full will result in undue economic hardship.
The IRS offer in compromise program is a GREAT way to settle tax debt. This article will give you an idea of how long some of the processing times can be.
First Step: Get the offer in compromise processable
The first step in getting your offer in compromise successfully is accepted is getting your proposal marked “processable,” by the IRS. This is essentially building the basic foundation for subsequent steps. The stronger your foundation is, the better your chances of moving forward. Processable, as defined by the IRS, means the following:
If you offer the 20% offer in compromise lump sum, the IRS is allowed to keep it even if they reject your offer. It’s VERY important that you are certain your offer is competitive, and has a chance of success.
The window of time for being deemed processable is 3-6 on weeks on average.
The Second Step: Being assigned and IRS Offer in Compromise Examiner
Your offer in compromise, after is deemed processable, will be sent to an IRS offer in compromise examiner. These examiners are all over the country. It takes 4-6 weeks to get a letter from your offer in compromise examiner. The letter states who they are, and give you their contact information. This lets you know the offer has been received, and the info of the person who will be contacting you.
Step 3: Examination
At this point, your designated examiner will go through all of the info and documents you submitted. The examiner has the same responsibilities as a regular IRS auditor. In addition to finding out your true income, the examiner will audit your assets to find the total value of everything you own. Their job is to understand what your reasonable collection potential is, over the remaining collection period.
The IRS isn’t stupid. It’s only accepted when you agree to give the IRS an amount they would be able to get from you via enforced collections. This step can take 4-8 weeks, depending on who the examiner is – and the complexity of your situation.
Step 4: Agree / Disagree With Examiner
During this fourth step, the examiner will either accept your proposal or reject it. If rejected, you have options. If you have valid counter claims, you could raise them. This is the time to get your claims visible with the help of an attorney. The examiner might give you an opportunity to increase your offer.
IF your offer is accepted, it’s likely about 5-8 months at this point. If you choose to rebut their proposal, and then it’s accepted after the rebuttal, it’s likely the process will take 8-12 months.
Step 4: Appeal, or no?
If the offer in compromise is rejected, you’re allowed to appeal the decision to the IRS office of appeals. Appeal officers are more likely to accept a previously rejected offer, if they’re given well documented info. IF you have no choice but to appeal, in order to get the offer accepted, the entire processing time can be 12-24 months.
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