When an individual is unable to pay taxes owed, an offer in compromise can be filed with the Internal Revenue Service (IRS) and the Arizona Department of Revenue.
An offer in compromise can be used by a taxpayer with the Internal Revenue Service if the inability to pay is due to liability is due to income, the ability to pay, expenses and asset equity. The IRS determines the new liability amount that they believe will fit the individual’s circumstances.
Those not eligible include individuals going through bankruptcy proceedings.
All forms within the Offer in Compromise Booklet, Form 656-B must be filed to submit an offer. In addition, a preference to the payment option (either lump sum cash or periodic payment) must be chosen.
The process of submitting an offer in compromise includes non-refundable payments to be applied to tax liability, notice of a Federal Tax Lien filed, other collection activities suspended, making all required payments, and offer is automatically accepted if IRS does not make decision with two years.
Once offer is accepted, than an individual must meet all terms under Form 656, Section 8. If offer is rejected, then an appeal can be done within 30 days and the Form 13711, Request for Appeal of Offer must be filed.
The Arizona Department of Revenue will also negotiate the tax liability to be lower. A Statement of Offer form must be filed with Arizona Department of Revenue as well as any documents necessary for review. This includes any liability an individual has with the IRS, completing all required financial statements, and reasons for filing.
Having the legal guidance of a tax attorney can help ensure that all documents have been collected and information for filing is current. Otto Shill has had experience in helping clients file taxes that they are able to afford. He can help form an offer in compromise for the both the IRS and Arizona Department of Revenue and collect documents necessary to submit offer.
Call JacksonWhite at (480) 464-1111 to discuss your case today.
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