An offer in compromise can make you happy: “Oh boy, the IRS said yes, and my tax debts are over!” Or it can frustrate you. Let’s go over how to navigate the IRS settlement guidelines and see what an OIC entails.
Here’s the good news:
- An OIC can be a fresh start from your IRS debt.
- You no longer have to worry that the IRS will seize your wages or bank accounts.
- Your credit score will no longer show any tax liens against you — the IRS releases them all.
- IRS collections are put on hold and the compromise is investigated. And then — peace, ah, peace — from IRS certified-mail letters and visits from IRS revenue officers.
- You put the debt behind you and you can go back to saving for retirement.
But here’s some of the bad news:
- The IRS will dig deeply into your finances.
- You have to tell the IRS where you work and bank and you must list your assets, including your house, cars, valuables and retirement accounts.
- The IRS will look at your paystubs, tax returns, bank statements, business profit and loss statements and proof of payment of monthly bills.
- After acceptance of the OIC, the IRS will put you on a five-year probation, requiring full compliance in filing and paying taxes. Not playing ball with all IRS expectations will default the settlement.
But wait! It gets even more dicey:
- An OIC is not a quick fix — it can take the IRS a minimum of nine to 12 months to investigate, and another six months if an appeal is needed. The IRS allows five to 24 months to pay the settlement.
- If you want to pay credit card, mortgage or car loan monthly bills, think again. The IRS may effectively take over your budgeting.
- If the IRS determines it can collect what you owe, it will reject your offer, but you can appeal.
- The settlement amount is not based on fairness, but on collectability.
- It may not work at all! The IRS recently rejected 60 percent of the offers it received: 41,000 rejections out of a pool of 68,000 submissions!
Let’s see where that leaves us:
- An OIC can be a wonderful way to rid yourself of the IRS bugging you.
- You need to consider it from all angles to make sure it’s the right move for you.
A compromise is not the only way to clear the IRS out of your life. The agency can agree that you owe debt, but not force you to repay it — the IRS terms it currently uncollectible and puts you in its bad debt category and leaves you alone. The IRS has 10 years to collect the taxes. You could let the time frame expire rather than compromising. Bankruptcy may be able to eliminate taxes too. See what’s in your best interest.
The point is that you have options, and you should talk to a professional if you’re having tax problems.
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It’s Free Money, and We Can Help You Get Your Share
Do you provide formal training for your employees? Exciting news: The government wants to chip in. Yes, really. In fact, for the past 35 years the State of California has provided over $1.5 billion in training subsidies to California businesses. Smaller companies can receive up to $50,000 per year and larger companies can receive up to $375,000 per year. Never heard of this program? You’re not alone.
The funding comes from a tax that every for-profit company in the state pays, the Employment Training Tax. This tax generates over $100 million a year that is then given back to companies that successfully apply for the funds.
This is not a tax credit. It’s “free money,” given in the form of a check. The money goes to help companies cover the cost of providing training for their employees so they can more efficiently and profitably do their jobs. Almost any type of training is covered, and there are very few restrictions on who can do the training. Typically most recipient companies simply have their own in-house personnel lead the training sessions.
Examples of eligible training include:
- Business Skills, such as Leadership, Team Building, Communication, Sales, Marketing or Customer Relations
- Computer Skills, such as Accounting Software, ERP, MRP, CRM, Scheduling, MS Office and other software needed to run a business
- Manufacturing Skills, which includes almost anything necessary to produce the product or service
Virtually any for-profit company with a physical location in California can take advantage of this program. And once the state cuts the check they have no hold on how the money is used.
Of course, being that this is a government program there is a lot of paperwork involved, and the learning curve for getting this paperwork figured out is fairly steep. Luckily, we’ve already cracked the code. Because of our experience we can handle over 90% of the work required to receive the funds, thus freeing you to do what you do best—run your company.
To see how this program can benefit your company please contact Jeff Myers at JMYERS@CPA-WFY.com or call 949-910-0122
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