Recently, the Internal Revenue Service came out with new guidelines for its “Fresh Start” program, making it easier for distressed taxpayers to successfully clear up their tax obligations with an Offer in Compromise. For years, the IRS has received criticism from tax attorney in Omaha and Congress for being too rigid and draconian in how they considered Offers in Compromise.
The changes to the previous way in which the IRS considered Offers in Compromise involve a taxpayer’s ability to pay a debt in five and twenty-four months rather than four to five years. Other changes includes the ability for a taxpayer to repay student loans as well as state and local delinquent taxes. The last amendment expands the allowance for living expenses. An attorney in Omaha should be hired when putting together an Offer in Compromise.
Offers in Compromise are agreements between taxpayers and the Internal Revenue Service to settle a tax liability for less than the full amount owed. In the past, if the IRS felt a taxpayer could pay the full debt (whether it be in full or over a period of time) over a five year period, then the offer would be rejected. A taxpayer’s assets and income are used by the IRS to determine their ability to pay which has, in the past, caused many Offers in Compromise to be rejected. Since 2007, nearly 70% of all requests were denied.
With the new guidelines, taxpayers, working with a qualified tax attorney in Omaha, should anticipate a much higher approval on a compromise and should expect to see the total tax debt reduced by 60% to 75%. Also, previous assets a taxpayer once owned but subsequently lost no longer counts as part of their ability to pay past taxes. The equity in assets which produce income now will no longer be included in the IRS’ calculation to collect outstanding taxes. Under the old IRS guidelines, taxpayers who owed student loans and state tax could not use those debts to offset their income. That rule has no changed.
With these new offer in compromise changes, taxpayers who normally would have been denied may now see a world of options available to them to settle their tax debt. Working with a tax attorney in Omaha who is aware of these changes and know how to navigate their complexities can help you settle your tax debt.
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