Most debt settlement companies are out of state and have no accountability. Moreover, these companies place their clients on unrealistic payment plans that are usually set up to fail. Our office receives many calls from individuals and families that are 8 to 12 months into these plans and have received lawsuits. Once they receive lawsuits, the debt settlement company says they cannot help.  As a bankruptcy firm whose attorneys have filed in excess of 9,000 bankruptcy cases, we have a unique approach to settling your unsecured debt. First, we are a law firm and not a “debt settlement company”.

Following are benefits to our debt settlement program:

* We are a reputable law firm and not a “debt settlement company”
* We will put you on a realistic payment plan that is calculated to work
* We only get paid when we settle your accounts (no massive maintenance fees)
* You will receive routine updates on your funds as held in our client trust account
* All settlements are done in writing

WHAT IS AN OFFER IN COMPROMISE?

An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service that settles the taxpayer’s tax liabilities for less than the full amount owed. Absent special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a 24 month payment plan.

In most cases, the IRS will not accept an OIC unless the amount offered by the taxpayer is equal to or greater than the reasonable collection potential. This calculation is how the IRS measures the taxpayer’s ability to pay and includes the value that can be realized from the taxpayer’s assets, such as real property, automobiles, liquid assets, and other property. This amount also includes anticipated future income, less certain amounts allowed for basic living expenses (a income versus expenses test).

GROUNDS FOR ACCOMPLISHING AN OFFER IN COMPROMISE

The IRS may accept an offer in compromise based on three grounds:

1. Doubt as to Collectibility – Doubt exists that the taxpayer could ever pay the full amount of tax liability owed within the remainder of the statutory period for collection.

2. Doubt as to Liability – A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law, (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.

3. Effective Tax Administration – There is no doubt that the tax is correct and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.

PAYMENT OPTIONS FOR OFFER IN COMPROMISE

In general, a taxpayer must submit a $150 application fee and initial payment along with the Form 656, Offer in Compromise. Taxpayers may chose to pay their offer in compromise in one of three payment options:

1. Lump Sum Cash Offer – Payable in non-refundable installments, the offer amount must be paid in five or fewer installments upon written notice of acceptance. A non-refundable payment of 20 percent of the offer amount along with the $150 application fee is due upon filing the Form 656.

If the offer will be paid in 5 or fewer installments in 5 months or less, the offer amount must include the realizable value of assets plus the amount that could be collected over 48 months of payments or the time remaining on the statute, whichever is less.

If the offer will be paid in 5 or fewer installments in more than 5 months and within 24 months, the offer amount must include the realizable value of assets plus the amount that could be collected over 60 months of payments, or the time remaining on the statute, whichever is less.

If the offer will be paid in 5 or fewer installments in more than 24 months, the offer amount must include the realizable value of assets plus the amount that could be collected over the time remaining on the statute.

2. Short Term Periodic Payment Offer – Payable in non-refundable installments; the offer amount must be paid within 24 months of the date the IRS received the offer. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the offer investigation.

The offer amount must include the realizable value of assets plus the total amount the IRS could collect over 60 months of payments or the remainder of the statutory period for collection, whichever is less.

3. Deferred Periodic Payment Offer – Payable in non-refundable installments; the offer amount must be paid over the remaining statutory period for collecting the tax. The first payment and the $150 application fee are due upon filing the Form 656. Regular payments must be made during the investigation.

The offer amount must include the realizable value of assets plus the total amount the IRS could collect through monthly payments during the remaining life of the statutory period for collection.

The IRS is not bound by either the offer amount or the terms proposed by the taxpayer. The OIC investigator may negotiate a different offer amount and terms, when appropriate. The investigator may determine that the proposed offer amount is too low or the payment terms are too protracted to recommend acceptance. In this situation, the OIC investigator may advise the taxpayer as to what larger amount or different terms would likely be recommended for acceptance.

HOW WE CAN HELP

We have accomplished settlements for many tax liability clients. Please contact us for a toll free consultation to determine if an OIC is the right option for you.

As a bankruptcy firm whose attorneys have filed in excess of 9,000 bankruptcy cases, we have a unique approach to settling your unsecured debt.  First, we are a law firm and not a “debt settlement company”.  Most debt settlement companies are out of state and have no accountability.  Moreover, these companies place their clients on unrealistic payment plans that are usually set up to fail.  Our office receives many calls from individuals and families that are 8 to 12 months into these plans and have received lawsuits.  Once they receive lawsuits, the debt settlement company says they cannot help.

Following are benefits to our debt settlement program:

• We are a reputable law firm and not a “debt settlement company”
• We will put you on a realistic payment plan that is calculated to work
• We only get paid when we settle your accounts (no massive maintenance fees)
• You will receive routine updates on your funds as held in our client trust account
• All settlements are done in writing

Contact us for a free consultation to determine whether a debt settlement makes sense for you.

Senate Democratic leaders appear likely to drop several high-profile legislative issues from their agenda, including efforts to tax bonuses paid to corporate executives and giving bankruptcy judges the ability reduce mortgage payments on the primary mortgages of chapter 13 debtors, according to a Congress Daily report today. Senate aides said that the legislative agenda this year might increasingly focus on revamping financial regulations — which could reach the Senate floor in late summer — and on health care reform.

The chamber will reconvene April 20 by taking up a fraud-enforcement bill that authorizes increasing Justice Department funding and authority to crack down on mortgage fraud and other crimes related to federal assistance programs. Those efforts come as more high-profile legislation sits on the back burner in the face of opposition from Republicans and moderate Democrats. Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Chairman Max Baucus (D-Mont.) have said that they have not dropped efforts to craft a bill slapping heavy taxes on bonuses for firms such as American International Group that received bailout money, but Democrats have no immediate plans to move an AIG bill in the face of White House concerns and strong opposition from the banking industry. Also faltering is mortgage cramdown legislation that lobbyists and some senators say lacks the votes to pass. Reid has said previously that he is prepared to drop the cramdown language provision from a broader housing bill if the votes are not there.

-American Bankruptcy Institue 4/9/2009