FAQs: Problems With the IRS
Can I Get Tax Relief from the
IRS?
Yes, if you qualify, you are legally entitled
to tax relief under the Internal Revenue Service’s “Offer
in Compromise” program.
How Does an “Offer in Compromise” (OIC)
Work?
An OIC is an agreement between a taxpayer and
the Internal Revenue Service that, in special
circumstances, will settle your outstanding tax burden
for an amount that is less than the actual total due.
However, the IRS will not accept an offer by you to
settle your outstanding tax if it believes that it can
recover the full amount from you in the form of either a
lump sum or an agreement to pay in installments.
Is It Likely that IRS Will Agree to an OIC?
You should be aware that it is unlikely that
the IRS will agree to an OIC with you if they have good
reason to believe that there is a “reasonable collection
potential” (RCP). An RCP is an assessment of your
ability to pay and includes—not just assessing your
available cash—but valuing all of your assets,
such as automobiles and real estate. The RCP also takes
into account your earning potential in the future with
allowances for basic living expenses.
Who Can Represent Me with the IRS?
You should be cautious of any promoter offering
to reduce your tax bill to just “pennies on the dollar”
using the OIC program. Inappropriate and unprofessional
advice can actually cost you money, so be aware
that an OIC agreement is for exceptional
circumstances only and will not always be accepted by
IRS. The bottom line is—be sure you get good advice and
representation from a professional.
You may be represented by a CPA or an EA
(Enrolled Agent) as long as he or she holds an active
license or certificate issued by the state in which that
person’s principal place of business is located.
Obviously, you may be represented by a national firm,
for instance, because the government allows CPAs to act
as representatives for their clients regardless of their
geographic residency.
If there is ever a time to have a strong relationship
with
your Austin accountant or CPA, it's when you've got
problems with the IRS. But the good news is that the law
is
so screwed up that a good Austin accountant can probably
help
you a great deal since apparently NO ONE really can
understand
the tax law.