On July 23rd the Wall Street Journal online edition published an article about a settlement between a well known nationwide tax problem resolution firm and 18 states in reference to misleading advertisements. The article pays particular attention to what the IRS refers to as unrealistic results promised by tax resolution firms with the “Offer In Compromise” as an alternative to other forms of collection. As well, peppered throughout the article, are stories of dissatisfied taxpayers who payed “thousands” of dollars to the tax resolution firm but didn’t receive the results they expected. The article doesn’t go so far as to negate the OIC as a solution to a taxpayer’s problem, but it certainly places it squarely in the “not likely to happen” category. It is unfortunate that the WSJ chose to paint this picture as there are glaring omissions regarding the OIC that make it a very realistic solution to many taxpayers. Additionally, there are several settlement options for a taxpayer outside the OIC, but the article only mentions installment agreements.
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By it's own reporting the Internal Revenue Service acceptance rate of Offers In Compromise has declined by a whopping 70% since 2001! Some critics voice the complaint that the IRS is not realistic in their assessment of taxpayer circumstances and accuse the service of routinely rejecting reasonable offers that are a good deal, not only for the taxpayer but for the IRS. The criticism is furthered by those that say the Offer In Compromise program helps the IRS collect monies it would otherwise not be able to collect and promotes the future compliance of the taxpayer making the "offer" by requiring that the taxpayer to file timely returns and pay taxes for the five years following offer acceptance at the risk of having the full liability reinstated.
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According to the 2007 Taxpayer Advocate Service Annual Report to Congress the IRS is expanding its FPLP collection initiatives. The Federal Payment Levy Program (FPLP) is an automated system that matches IRS records against those of the government's Financial Management Service (FMS) and allows continuous levies to be issued for up to 15 percent of federal payments due to taxpayers who have unpaid federal tax liabilities. FPLP levies can attach to a variety of sources of federal income, ranging from salaries of federal employees to retirement income to federal contractor (or vendor) payments. However until recently the bulk of all FPLP levy payments received have from Social Security recipients.
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There are a lot of companies online and offline that want your IRS Problem Resolution business. They will go to just about any lengths to get too. My understanding of most of the "national" companies is that whomever calls their tollfree number is greeted by a salesperson who guarantees that their tax problem can be settled for mere "pennies on the dollar" as long as a credit card number is immediately forthcoming. Well….that's not how we do business. Things are different at my firm. We aim to help real people with real problems. To be totally frank with you, an Offer in Compromise is not right for everyone…in fact it's not right for most taxpayers. But in certain situations, it's a terrific choice and the best route to take. Is it best for you? Take a look at the video that I put together to explain the process and to help you decide if an Offer in Compromise is the best option for solving your IRS Problem for good. What we do is a comprehensive analysis on every client that is as unique as each individual IRS Problem. Only after that analysis is complete do I advise you as to the best possible solution to your problem. In some cases, it's an Offer in Compromise and in some cases it's not what you want to hear. But in every case, it's the God's honest truth.
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While an Offer in Compromise (OIC) may be the solution to your IRS Problems, failing to follow a few tips could make the offer unacceptable.
• Make sure you fill out Form 656 (Offer in Compromise) fully and tell the truth. Another form that may be necessary is Form 433-A (Collection Information Statement).
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