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How Much Should I Offer in Compromise to the IRS?

How Much Should I Offer in Compromise to the IRS - Rush Tax Resolution

If you have tax debt, there are a few ways you can get back in good standing with the tax man, one of these being an offer in compromise. You may be asking yourself “how much should I offer in compromise to the IRS”? Here’s what to know.

Tax debt is frightening. A debt to the government isn’t easily forgotten, and the IRS can leverage a steep interest rate and multiple penalties to grow your debt over time. Thankfully, in many cases, taxpayer debt is relatively minor. One mistake on your return or one deduction you might have erroneously applied to your tax liability can lead to a surprise bill of a few hundred dollars.

But some mistakes and issues come with a much heftier price. Forgetting to pay your quarterly dues, or to miss a return for months on end can lead to a big bill. As can bad financial or tax advice, creating a bogus return that makes no sense, and forcing the IRS to completely scrap what you’ve sent in.

When coupled with unfortunate financial circumstances, a large tax debt can be financially and socially crippling. The IRS may resort to collection actions to coerce a payment plan, including placing all your property on a lien, or even enforcing a levy on your wages.

So, what happens if you just aren’t in a position to pay your debt? Can the IRS levy you indefinitely? Not if you talk them into a payment plan that might benefit both of you. That is where an offer in compromise comes into play.

 

Understanding an Offer in Compromise

An offer in compromise is a proposal the taxpayer themselves have to draft and send to the IRS (with the help of a tax professional, if you choose to avail of one’s services). The “compromise” in this case is that you agree into a monthly payment plan, but for a reduced total debt.

An offer in compromise is not a given, even for taxpayers who have fallen on hard times. But a well-crafted offer does raise your chances of the IRS taking the deal, which can mean dealing with a fraction of the debt originally pinned on you.

 

How an Offer in Compromise Works

The first prerequisite is eligibility. The IRS has a pre-qualifier tool that you can use to get a rough idea of whether an offer in compromise is a possibility for you. This tool can be helpful, but don’t rely on it. It isn’t a guarantee from the IRS itself that they would accept your offer, and there’s still a bit of paperwork to go through before the offer gets sent their way.

The basic eligibility requirement for an offer in compromise is financial proof that you cannot reasonably pay off your debt within the next few years. In theory, the offer in compromise exists so taxpayers who have been saddled with tax debt for years can at least pay off some of it before their debt expires. A win-win for both parties – the taxpayer gets back into good standing with the IRS, and the IRS sees some of the taxpayer’s tax liability covered.

Over the years, the requirement for an offer in compromise has dropped from “paid until tax debt expiration” to “paid within two to three years”. This means that if you cannot reasonably pay your debt in monthly installations over 24 to 36 months, you may be able to negotiate a reduced tax debt with the IRS.

Calculating what that reduced tax debt should look like is the next step towards an offer in compromise. The trick here is that the government is asking you to make a proposal. Don’t be fooled into thinking they’re generous in this case. The IRS can take months to deliberate your proposal, during which time your debt will continue to accrue penalties and interest. And if they reject it, it will take some more time before your next attempt is considered.

The IRS will comb through your finances, tax returns, and information reports from different agencies and financial institutions to determine your reasonable collection potential (RCP) before engaging with your offer in compromise. In other words, your RCP is the amount of money the IRS expects to see from you on a monthly basis. If your offer is under that RCP, it has a poor chance of being accepted.

 

When is an Offer in Compromise Valid?

Should you consider an offer in compromise? The answer depends on whether you think you can afford to pay your tax debt within the next few years, without making unreasonable cuts to the rest of your expenditures. The IRS obviously won’t consider an offer in compromise if you have multiple valuable assets to liquidate, a stable monthly income well above your basic cost of living, and very few dependents.

But if you are struggling to make ends meet, have no potential source of liquidity, and are living on the only asset you own, you may want to talk to a tax professional about considering a reasonable offer in compromise to cut down on the impact your tax debt will continue to have on your finances.

You don’t need to be broke to make an offer in compromise work. You just need to prove that you can’t be expected to pay your debt off in a short period of time.

 

Calculating Your Reasonable Collection Potential

The IRS will generally calculate your reasonable collection potential based on your net realizable equity and your expendable income.

Net realizable equity is what you have to your name if everything is sold at its quick sale value, i.e., the price you could get if you wanted to liquidate it fast, often calculated at 80 percent of current market value, minus any current liabilities against your assets, such as a mortgage or ongoing credit.

Expendable income is any money you earn after taxes – this means it does not take into consideration rent and food. The number of dependents you have may also impact your RCP.

In addition to assets and income, the IRS will also take into consideration any money held in your bank accounts as cash, minus one month’s worth of allowable expenses and $1,000 extra.

When calculating the value of any vehicles you own, the IRS allows for an additional deduction of your net equity per vehicle (one vehicle if you live alone, two if it’s a joint household).

You can put these numbers together yourself by taking your current earnings minus taxes and basic living costs, your current cash, the value of every asset you can sell and still live with a roof over your head, and then getting an estimate of how much you can set aside per month this way. If you can cover your entire debt within a year or two of monthly payments, it will be difficult to make the IRS accept a reduced tax debt.

But if it becomes clear that you’re in over your head, then taking note of whatever you can pay will give you a good idea of what your offer in compromise might look like.

 

Always Talk to a Professional

At any rate, it’s important to discuss the idea with a tax professional. Not only will they have a better idea of how to negotiate an offer in compromise with the IRS, but they may be able to help you realize a better deal depending on other circumstances in your life, and other ongoing costs and liabilities.

We at Rush Tax Resolution are at your disposal. Give us a call for a free consultation, and more information on potential offers in compromise.

What Does VSC Mean? Read This Great Review to Find Out

ANOTHER GREAT REVIEW

★★★★★

09/18/2018

Nothing could compare to the stress, a notice from the IRS could give you. I mean I had sleepless nights and almost went into depression. On my way back home from a long drive from LA, I heard Rush Tax Resolution being advertised on the radio and how they had raving reviews from the BBB.

I called them right away and that gave clarity into what seems a desperate situation in a my life. These guys are great! from *** who answered me first to ********* who handled my case superbly! These guys will devote their time and listen to you whole heartedly and will not rush you or be judgmental.

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I highly recommend this company because they will fight for you and restore your peace of mind. VSC as in Very Satisfied Client.

www.bbb.org/us/ca/woodland-hills/profile/tax-enrolled-agent/rush-tax-resolution-1216-354752/customer-reviews

Another 5 Star Yelp Review

8/30/2018

Another 5 Star Review for our top gun staff at Rush Tax Resolution.

*****
Rush Tax Resolution family have been nothing short of a God send company!
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RTR is a family that spends quality time working with its members/clients to assist in all questions and concerns regards their tax issues.

I also solute their efforts and professionalism they display when working with clients who may be swimming in tax debt and not seeing the light at the end of their tunnels. Lastly, they break it down in simple terms, so anyone may understand that there are options to finding that light at the end of that tunnel.

Thank you Joe, Omar and all his staff for being the highest rated tax debt resolution company. Congrats RTR!

Another Great Customer Review on the BBB

Review of Rush Tax Resolution Original Review:

I want to say I was having a lot of IRS issues and had heard many people offer to help but ignored the advertisements as not believable. But then I heard the ad for Rush Tax Resolution and their no complaint claim. Not falling for easy claims I checked it out but still waited but finally heard it again on the radio and called was connect with Khristina Ramirez was was a big help from day one and I am not an easy client as I had many personal issues to deal with besides taxes yet she has always been their never pushing too hard and finally got my tax issued resolved and is now preparing my last tax return. Very helpful wish I had not waited. Great service reviews from Thomas L, (zip code: 91402) on 07/31/2018

www.bbb.org/losangelessiliconvalley/business-reviews/tax-enrolled-agent/rush-tax-resolution-in-woodland-hills-ca-354752/reviews-and-complaints Continue reading “Another Great Customer Review on the BBB”

Michael Medved endorses Rush Tax Resolution

 

 

 

Michael Medved strongly endorses Rush Tax Resolution

on his nationally syndicated talk radio show.

 

In his own words,

“…they are A plus rated with an unheard of zero complaint history, and that you can trust them…”

 

 

Listen to Michael’s endorsement here….

 

Michael Medved is a nationally syndicated radio talk show host and bestselling author. His daily three hour show reaches 300 stations across the country.  He has an audience of more than 4 million people.  Thus, placing him, for nearly two decades, on the Talkers Magazine list of the top ten political talk shows in the United States.

 

 

Born in Philadelphia, Michael attended public schools in San Diego and Los Angeles. Next, he attended Yale at age 16 as a National Merit Scholar. He majored in American History and graduated with honors.  After that, he attended Yale Law School, where his classmates included Bill and Hillary Clinton.

 

 

 

Michael’s columns on politics and media appear regularly in the Wall Street Journal and USA Today. He is a member of the Board of Contributors. His work as a film critic, based on short-lived  experience as a Hollywood screen writer, featured positions at CNN (1980-84),Great Britain’s Channel 4 Network (1984), and PBS (1985-96) where he served as co-host of the popular weekly show Sneak Previews. He was also Chief Film Critic of the New York Post for five years before launching his daily radio show in 1996.

 

 

Rush Tax Resolution is very proud to have Michael Medved join the long list of people that are currently recommending them as the best, and the one to trust.

 

 

 

 

 

Sean Hannity Recommends Rush Tax Resolution

Sean Hannity Tax Relief - Rush Tax Resolution

The #1 rated radio show host in the country, Sean Hannity, discusses why he ONLY recommends Rush Tax Resolution:

 

“You know I know there are a lot of tax relief firms out there, so which one do you trust? Hey it’s your friend Sean Hannity here, and there’s a company that wants to help: Rush Tax Resolution. Now they have an A+ rating from the Better Business Bureau and an unheard of zero complaint history and they’ve helped thousands of people just like you. Now one Rush Tax client, well let’s call him Frank, he owed over one million dollars and Rush Tax Resolution was able to settle for less than $5900. Rush Tax Resolution has been able to get bank levies, wage garnishments released within hours. Now they’re not gonna take your case, unless they can help you. Period. Now the only one to call is my friends at Rush Tax Resolution 855-477-2255. Now if you owe the state or the IRS $10,000, or if you’re under audit – don’t call the IRS on your own – call 855-477-2255.” – Sean Hannity

 

Sean Hannity and his staff  agreed to personally recommend our firm, Rush Tax Resolution.  First, Sean and his team thoroughly researched our actual results and our record on the Better Business Bureau.  Then, they were impressed with our dozens of positive glowing testimonials, and our zero complaint history.

Hannity is currently ranked No. 1 in Talker Magazine‘s Top 100 Talk Host in America. Furthermore, he was listed as No. 72 on Forbes‘ “Celebrity 100” list in 2013.

Hannity received a Marconi Award in 2003 and 2007 as the Network Syndicated Personality of the Year from the National Association of Broadcasters.

In 2009, Talkers Magazine listed Hannity as #2 on their list of the 100 most important radio talk show hosts in America. Furthermore, the same magazine gave Hannity their Freedom of Speech Award in 2003.

Hannity has written three books. His Let Freedom Ring: Winning the War of Liberty over LiberalismDeliver Us from Evil: Defeating Terrorism, Despotism, and Liberalism, and Conservative Victory: Defeating Obama’s Radical Agenda have all been New York Times Bestsellers.

We are very proud of the fact that Sean Hannity has chosen Rush Tax Resolution as his top choice for a tax relief firm that you can trust, and that delivers verifiable results.

 

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