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Changes to IRS Tax Settlement Rules

In the last few years, the IRS has made a concerted effort to get individuals back into excellent condition by reaching deals on overdue taxes. The regulations impacting this program have just altered considerably.

Modifications to IRS Tax Settlement Rules

The IRS utilized to be the terror in many peoples problems. Specifically, individuals who supported on their taxes resided in fear of having the IRS catch up with them and freeze their checking account, sell off their home and so on. To advertise voluntary resolutions, the IRS set up a program known as the offer in compromise.

The offer in compromise program was designed to let taxpayers with back tax problems solve their problems voluntarily. In exchange for this voluntary action, the IRS would think about a decrease of the amount past due consisting of charges and interest.

Beginning July 16, 2006, the offer in compromise program is going through changes pursuant to a brand-new federal law. Ironically, the little government Republican bulk in Congress pushed with this nasty piece of legislation known as the Tax Increase Prevention and Reconciliation Act of 2005. The legislation dictates really particular changes to the offer in compromise program.

The biggest modification is the new 20 percent regulation. Pursuant to the new legislation, a taxpayer that has problems with unpaid taxes should send in 20 percent of the offer amount with their offer in compromise. If the funds are not submitted, the amount is not refundable nor will any offer in compromise be acknowledged. The reasoning behind this legislation is befuddling to numerous.

When a taxpayer gets behind on tax repayments, they often get method behind. It is rare to discover somebody who is just one year in arrears. Seemingly, many individuals that miss one year take the head in the sand technique. Being afraid all kinds of difficulty, they just ignore the situation. When the next year rolls around, they don’t file once more because they are fretted about notifying the IRS. As a result, the amount of taxes due grows and grows, especially when charges and interest are added. While the offer is a small portion of this amount, the keynote is that you don’t have sufficient money to pay the bill in the first place. The 20 percent requirement seems to serve no purpose other than to give individuals another reason to ignore the issue.

The offer in compromise was initially designed to get individuals back into the system. If taxpayers were provided a clean beginning, researches and statistics revealed that the government would gather far more in incomes over the years. For all extensive purpose, the new 20 percent regulation disputes with this purpose and harms this program.

Specifically, individuals who got behind on their taxes lived in fear of having the IRS catch up with them and freeze their bank account, sell off their home and so on. To advertise voluntary resolutions, the IRS set up a program known as the offer in compromise.

The offer in compromise program was designed to let taxpayers with back tax problems solve their problems voluntarily. Pursuant to the new legislation, a taxpayer that has problems with past due taxes should send in 20 percent of the offer amount with their offer in compromise. When a taxpayer gets behind on tax repayments, they nearly always get method behind.

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