Whether an individual tapped into their 401k and did not pay the taxes, or a business experienced a downturn and had difficulty meeting quarterly estimates or payroll taxes, or the IRS or State is auditing sales tax, reporting income tax returns, or pension plans, there is a solution.

Following are some tools available to help taxpayers in tax trouble.

Offer in Compromise (OIC)

The Offer in Compromise (OIC) is a program offered by the Internal Revenue Service. Not a lot of people are aware of this program, and the IRS doesn’t routinely publicize it. It allows individual and business taxpayers with an unmanageable tax debt to negotiate the payment amount with the IRS – not just negotiate a payment schedule, but the amount to be paid. The name of the program says it all: the taxpayer offers a compromise to the IRS and negotiations begin.

By negotiating an OIC, taxpayers can significantly reduce their past-due tax liabilities. Recently, the IRS has been settling with our clients for an average of 60 – 97% of the debt owed, with the higher percentages being more common. For example, a recent client with a $303,000 debt had an OIC accepted for $9,000.

It’s not as easy as pulling a number out of a hat, however. There are regulations that must be followed, detailed financial paperwork to fill out, and needs-based calculations to undertake. Navigating through the IRS and negotiating with them can be difficult for taxpayers who go it alone. People who retain Tax Resolution Specialists (TRS) find their problems are often solved more quickly and without a legal mess. We advocate for you and protect your rights. We can also help you avoid major problems that can make unpaid tax debts an even heavier burden to carry, such as bank levies, property and account seizure, and wage garnishments.

State and Local Government Workouts

Unfortunately, neither the State of Michigan nor local governments have an Offer in Compromise program – but we are encouraging them to enact it. For now, we will get the collection arm of the State government off your back by negotiating reasonable payment plans for our clients, work to remove liens and levies, or get them listed as “temporarily noncollectable.” We even accompany our clients to court if a bench warrant has been issued due to unpaid city taxes.

Bankruptcy

We advise those who have an unpaid tax debt and who are contemplating filing bankruptcy to contact us before they file. When a delinquent taxpayer files bankruptcy, their expenses are reduced – the very expenses that make an Offer in Compromise more likely to be approved. We have a bankruptcy attorney on staff who can assist our clients or we can work with your outside bankruptcy attorney to ensure you get all the possible relief from debt that you can.

1099 Trouble from Foreclosure and/or Debt Forgiveness

Sometimes, when your house has been foreclosed, the mortgage company will send you a 1099 on the debt you no longer owe. Credit card companies have also been known to send card holders 1099s on a debt forgiveness amount. Unfortunately, the IRS may count that as income that the taxpayer did not claim. Under certain circumstances, we can get relief for taxpayers in this situation. We recently helped a client get back from the IRS what he already paid them for the debt forgiveness.

Innocent Spouse Relief

It is sad, but true: many people who have an ongoing tax debt do not tell their spouse about it. Unfortunately, this puts those spouses in a difficult situation, signing their name to tax returns and making them liable for the tax debt. Sometimes this comes out in a divorce, other times through a knock on the door by a taxation authority.

The good news in this difficult situation is that, if the Innocent Spouse has been paying his or her own taxes, it is possible for the Innocent Spouse to be released from liability for their spouse’s tax debt. You do not have to go through a divorce to apply for this relief. It is a difficult process, but a recent client was declared innocent of his wife’s $18,000 tax debt.

We provide onsite tax resolution seminars for businesses, realtors, and other who might need tax advice. We are also available to consult with other professionals on tax aspects of business, litigation, real estate, and buying and selling of businesses.