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IRS Committed to Stopping Offshore Tax Cheating; Remains on “Dirty Dozen” List of Tax Scams for 2017

IRS YouTube Videos:

Dirty DozenEnglish | Spanish | ASL

WASHINGTON — The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its 2017 list of tax scams known as the “Dirty Dozen.”

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 55,800 disclosures and the IRS has collected more than $9.9 billion from this initiative alone.

In addition, another 48,000 taxpayers have made use of separate streamlined procedures to correct prior non-willful omissions and meet their federal tax obligations, paying approximately $450 million in taxes, interest and penalties. The IRS conducted thousands of offshore-related civil audits that resulted in the payment of tens of millions of dollars in unpaid taxes. The IRS has also pursued criminal charges leading to billions of dollars in criminal fines and restitutions.

“Offshore compliance remains a top IRS priority. We’ve collected $10 billion in back taxes in recent years with 100,000 taxpayers making use of our voluntary disclosure programs,” said IRS Commissioner John Koskinen. “The IRS receives more foreign account information each year, making it harder to hide income offshore. I urge taxpayers with international tax issues to come forward and get right with the system.”

Compiled annually, the “Dirty Dozen” lists a variety of common scams that taxpayers may encounter anytime, but many of these schemes peak during filing season as people prepare their tax returns or hire people to help with their taxes.

Illegal scams can lead to significant penalties as well as interest and possible criminal prosecution. The IRS Criminal Investigation Division works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Hiding Income Offshore

Over the years, numerous individuals have been identified as evading U.S. taxes by attempting to hide income in offshore banks, brokerage accounts or nominee entities. Then access the funds using debit cards, credit cards or wire transfers. Others have employed foreign trusts, employee-leasing schemes, private annuities or insurance plans for the same purpose.

The IRS uses information gained from its investigations to pursue taxpayers with undeclared accounts, as well as bankers and others suspected of helping clients hide their assets overseas.

While there are legitimate reasons for maintaining financial accounts abroad, there are reporting requirements that need to be fulfilled. U.S. taxpayers who maintain such accounts and who do not comply with reporting requirements are breaking the law and risk significant  fines, as well as the possibility of criminal prosecution.

Since 2009, tens of thousands of individuals have come forward to voluntarily disclose their foreign financial accounts, taking advantage of special opportunities to comply with the U.S. tax system and resolve their tax obligations. And, with new foreign account reporting requirements being phased in over the next few years, hiding income offshore is increasingly more difficult.

At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program  following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Third-Party Reporting

Under the Foreign Account Tax Compliance Act (FATCA) and the network of intergovernmental agreements between the U.S. and partner jurisdictions, automatic third-party account reporting has entered its second year. The IRS continues to receive more information regarding potential non-compliance by U.S. persons because of the Department of Justice’s Swiss Bank Program. This information makes it less likely that offshore financial accounts will go unnoticed by the IRS.

Potential civil penalties increase substantially if U.S. taxpayers associated with participating banks wait to apply to OVDP to resolve their tax obligations.

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IRS “Dirty Dozen” Tax Scams List for 2017 Continues with Warning Against Frivolous Tax Arguments

IRS YouTube Videos:

Dirty DozenEnglish | Spanish | ASL

WASHINGTON – The Internal Revenue Service today continued rolling out its 2017 “Dirty Dozen” tax scams list by warning taxpayers against using frivolous tax arguments to avoid paying taxes.

Promoters of frivolous schemes encourage taxpayers to make unreasonable and outlandish legal claims to avoid paying their taxes. Time and again these arguments have been thrown out of court.

“Taxpayers should steer clear of tax-avoidance arguments and the unscrupulous promoters of such schemes,” said IRS Commissioner John Koskinen. “Taxpayers tangled up in these scams end up paying back taxes and often stiff penalties as well.”

In its “The Truth about Frivolous Tax Arguments” document, the IRS outlines some of the more common frivolous tax arguments. Examples include contentions that taxpayers can refuse to pay taxes on religious or moral grounds by invoking the First Amendment. The cases cited in the document demonstrate how frivolous arguments are treated by the IRS and the courts. Other examples of frivolous arguments include those that the only “employees” subject to federal income tax are employees of the federal government, and that only foreign-source income is taxable.

The “Dirty Dozen” is an annual list compiled by the IRS. It describes a variety of common scams that taxpayers may encounter. Many of these schemes peak during filing season as people prepare their returns or hire others to help with their taxes.

Perpetrators of illegal scams may be subject to significant penalties and interest as well as possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shut down scams and prosecute the criminals behind them.

Don’t Get Talked into Using a Frivolous Argument

Taxpayers have the right to contest their tax liabilities in court, but they must obey the law and pay their fair share of federal taxes.

The penalty for filing a frivolous tax return is $5,000. The penalty applies to anyone who submits a purported tax return or other specified submission, if any portion of the submission is based on a position the IRS identified as frivolous in Notice 2010-33, 2010-17 I.R.B. 609, or reflects a desire to delay or impede administration of the tax laws. The list is not all inclusive and the courts may add to it at any time.

Those who promote or adopt frivolous positions also risk a variety of other penalties. For example, taxpayers can face an accuracy-related penalty, a civil fraud penalty, an erroneous refund claim penalty, a failure to file penalty or a failure to pay penalty. Tax Courts may also impose a penalty against taxpayers who make frivolous arguments in court.

Taxpayers who rely on frivolous arguments and schemes may also face criminal prosecution for attempting to evade or defeat tax. Taxpayers may also be convicted of a felony for filing a false return. Those who promote frivolous arguments and those who help taxpayers to claim tax benefits based on frivolous arguments may be prosecuted for a felony.

 

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Avoid the Rush: Check IRS.gov Before Making IRS Office Appointment

WASHINGTON – February is not only a peak time for calls to the Internal Revenue Service’s call center; it’s also the peak time for visits to IRS offices for face-to-face tax help.

The IRS is reminding taxpayers that all IRS Taxpayer Assistance Centers now provide service by appointment.

Most taxpayers requesting appointments with the IRS can easily find answers to their questions on IRS.gov. Many people come to Taxpayer Assistance Centers looking for tax forms when they are available on IRS.gov. Some libraries and other locations also may carry the most commonly used tax forms and schedules.

Other self-service options – and reasons people visit IRS offices – include refunds, transcripts and tax payments. Taxpayers who visit regularly to make routine tax payments should consider online payment alternatives. Taxpayers can pay online, by phone or via their mobile device and get instant confirmation that their payment has been sent.

The appointment service and toll-free phone options help the IRS serve more taxpayers who have no other option but to visit or call for assistance. If you need your prior-year adjusted gross income to complete the electronic filing process, please use Get Transcript Online or Get Transcript by Mail or review other options. Taxpayers should note that ordering a tax transcript will not reveal their refund delivery date. Use the “Where’s My Refund?” tool for the most up-to-date information.

The IRS will staff its toll-free telephone service Saturday, Feb. 18, from 9 a.m. to 5 p.m., callers’ local time, and Monday, Feb. 20, from 7 a.m. to 7 p.m., callers’ local time. All IRS taxpayer Assistance offices will be closed Monday, Feb. 20, for Presidents’ Day.

This tip is part of the IRS Avoid the Rush news release series designed to provide taxpayers with the information they need, when they need it. More details on this series, including information on additional online resources, are available on IRS.gov.

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Avoid the Rush: Be Prepared to Validate Identity if Calling the IRS

WASHINGTON – The Internal Revenue Service said mid-February marks the agency’s busiest time of the year for telephone calls. The IRS is reminding taxpayers who have questions about their tax accounts to be prepared to validate their identity when speaking with an IRS assistor. This will help avoid the need for a repeat call.

The IRS recognizes the importance of protecting taxpayers’ identities. That’s why IRS call center assistors take great care to make certain that they only discuss personal information with the taxpayer or someone authorized to speak on the taxpayer’s behalf.

Customer service representatives can answer refund questions beginning 21 days after the return was filed. Taxpayers should use “Where’s My Refund?” to track the status of their refund. Taxpayers who are e-filing their return and need their prior year adjusted gross income should use the Get Transcript tool on IRS.gov. IRS telephone assistors cannot provide prior-year adjusted gross income over the phone for filing purposes.

Where’s My Refund?” will be updated Feb. 18 for the vast majority of early filers who claimed the Earned Income Tax Credit or the Additional Child Tax Credit. Before Feb. 18, some taxpayers may see a projected date or a message that the IRS is processing their return.

By law, the IRS is required to hold EITC and ACTC refunds until Feb. 15. However, taxpayers may not see those refunds until the week of Feb. 27. Due to differing timeframes with financial institutions, weekends and the Presidents Day holiday, these refunds likely will not start arriving in bank accounts or on debit cards until the week of Feb. 27 — if there are no processing issues with the tax return and the taxpayer chose direct deposit.

The IRS phone assistors do not have additional information on refund dates beyond what taxpayers have access to on “Where’s My Refund?”. Given high call volumes, taxpayers should not call unless directed to do so by the refund tool. In addition, a common myth is that people can get their refund date earlier by ordering a tax transcript. There is no such “secret” option to find a refund date by calling the IRS or ordering a transcript; just check “Where’s My Refund?” once a day.

If Calling About a Personal Tax Account

Before calling about a personal tax account, have the following information handy:

  • Social Security numbers and birth dates for those listed on the tax return
  • An Individual Taxpayer Identification Number (ITIN) for those without a Social Security number (SSN)
  • Filing status – Single, Head of Household, Married Filing Joint or Married Filing Separate
  • Prior-year tax return. The IRS may need to verify identity before answering certain questions
  • A copy of the tax return in question
  • Any letters or notices received from the IRS.

If Calling About a Letter 4883C

At this time of year, the IRS begins sending letters to taxpayers inquiring about suspicious tax returns it has identified. It’s important for the IRS and the taxpayer to confirm whether or not the taxpayer actually filed the return in question. Taxpayers have 30 days to call, which allows time to avoid the rush around Presidents’ Day.

To expedite the process when calling, taxpayers MUST have:

  • The IRS letter
  • Copy of prior year tax return (if filed)
  • Current year tax return (if filed)
  • Any supporting documents for each year’s return (such as W-2’s, 1099’s, Schedule C, Schedule F, etc.)

If Calling About Someone Else’s Account

IRS call center assistors will only speak with the taxpayer or their legally designated representative. Before calling, have the following information handy:

If Calling About a Deceased Taxpayer

Be prepared to fax:

To better serve taxpayers around the President’s Day holiday, the peak time of the year for telephone calls to the IRS, the IRS toll-free lines will be open Saturday, Feb. 18, from 9 a.m. to 5 p.m. (callers’ local time) and Monday, Feb. 20, from 7 a.m. to 7 p.m. (callers’ local time).

This tip is part of the IRS Avoid the Rush news release series designed to provide taxpayers with the information they need, when they need it. More details on this series, including information on additional online resources, are available on IRS.gov.

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IRS Includes Falsifying Income Scam in 2017 List of “Dirty Dozen”

IRS YouTube Videos:

Dirty DozenEnglish | Spanish | ASL

WASHINGTON — The Internal Revenue Service today continued issuing its annual list of common tax scams by warning taxpayers to avoid schemes to erroneously claim tax credits. This year’s “Dirty Dozen” includes falsifying income to claim tax credits.

“Taxpayers should ensure all the information they provide on their tax return is accurate,” said IRS Commissioner John Koskinen. “Falsifying income to claim tax credits is against the law. Taxpayers are legally responsible for all the information reported on their tax returns.”

The “Dirty Dozen,” a list compiled annually by the IRS, describes a variety of common scams that taxpayers may encounter. Many of these schemes peak during filing season as people prepare their returns or hire others to help them.

Scams can lead to significant penalties and interest and possible criminal prosecution. IRS Criminal Investigation works closely with the Department of Justice to shutdown scams and prosecute the criminals behind them.

Don’t Make Up Income

Some people falsely increase the income they report to the IRS. This scam involves inflating or including income on a tax return that was never earned, either as wages or self-employment income, usually to maximize refundable credits.

Much like falsely claiming an expense or deduction you did not pay is not right, claiming income you did not earn is also inappropriate. Unscrupulous people do this to secure larger refundable credits such as the Earned Income Tax Credit and it can have serious repercussions. Taxpayers can face a large bill to repay the erroneous refunds, including interest and penalties. In some cases, they may even face criminal prosecution.

Fake Forms 1099-MISC

The IRS cautions taxpayers to avoid getting caught up in scheme disguised as a debt payment option for credit cards or mortgage debt. It involves the filing of a Form 1099-MISC, Miscellaneous Income, and/or bogus financial instruments such as bonds, bonded promissory notes or worthless checks.

Con artists often argue that the proper way to redeem or draw on a fictitious held-aside account is to use some form of made-up financial instrument such as a bonded promissory note that purports to be a debt payment method for credit cards or mortgage debt. Scammers provide fraudulent Form(s) 1099-MISC that appear to be issued by a large bank, loan service and/or mortgage company with which the taxpayer may have had a prior relationship, to further perpetrate the scheme. Form 56, Notice Concerning Fiduciary Relationship, may also be used by participants in this scam to assign fiduciary responsibilities to the lenders.

Taxpayers may encounter unethical return preparers who make them aware of these scams. Remember: Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else.

Choose Return Preparers Carefully

It is important to choose carefully when hiring an individual or firm to prepare your return. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to jail time for defrauding their clients.

To find tips about choosing a preparer, better understand the differences in credentials and qualifications, research the IRS preparer directory, and learn how to submit a complaint regarding a tax return preparer, visit www.irs.gov/chooseataxpro.

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Arena and Associates, Inc. – Rob Arena -No Complaints

e-News for Tax Professionals February 10, 2017
Arena and Associates No Complaints

Arena and Associates No Complaints

For Help with IRS tax debt Arena and Associates can help. Rob Arena is a top advisor to people with tax debts across the country. Call for help today 303-847-4038.

Inside This Issue

 

1.     Don’t Fall Prey to the Dirty Dozen

2.     Annual Filing Season Program Update

3.     Two New Members Join the Electronic Tax Administration Advisory Committee

4.     Alert to Return Preparers: Letters 4858 and 5364

5.     YouTube: Retirement Plan and IRA Rollovers

6.     Technical Guidance

 

1.  Don’t Fall Prey to the Dirty Dozen

Compiled annually, the Dirty Dozen is a list of common scams that taxpayers and tax professionals may encounter anytime of the year. But many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Learn more about the Dirty Dozen in this video.

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2.  Annual Filing Season Program Update

More than 48,000 tax return preparers have participated in the 2017 IRS Annual Filing Season Program and obtained an official Record of Completion.

But another 37,000 return preparers who have completed the required amount of continuing education and been invited to participate have not consented to the Circular 230 requirements to receive a Record of Completion.

The deadline for preparers to consent to the Circular 230 requirements and become full participants is April 18. A video tutorial of the process is available here.

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3.  Two New Members Join the Electronic Tax Administration Advisory Committee

The IRS announced the selection of two new members for the Electronic Tax Administration Advisory Committee (ETAAC).

Established in 1998, ETAAC provides an organized public forum for discussion of electronic tax administration issues, including the prevention of identity theft and refund fraud, in support of the overriding goal that paperless filing should be the preferred and most convenient method of filing tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and tax software providers to fight electronic fraud.

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4.  Alert to Return Preparers: Letters 4858 and 5364

IRS is sending Letter 4858 to tax preparers who completed 2016 returns claiming the earned income tax credit but who may not have met the required due diligence requirements. Disregarding due diligence requirements could result in penalties and other consequences for preparers and their clients. Letter 4858 comes in both English and Spanish.

IRS is also sending Letter 5364 to tax preparers who completed two or more 2016 paper returns claiming Earned Income Tax Credit (EITC), American Opportunity Tax Credit (AOTC), or Child Tax Credit/Additional Child Tax Credit (CTC/ACTC) without including Form 8867, Paid Preparer’s Due Diligence Checklist.

For more information on the due diligence requirements, visit Tax Preparer Toolkit on EITC Central.

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5.  YouTube: Retirement Plan and IRA Rollovers

Find out how your clients can roll over funds in an IRA or retirement plan into another account by watching this IRS YouTube video.

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6.  Technical Guidance

Revenue Ruling 2017-05 includes covered compensation tables effective January 1, 2017.

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Arena and Associates, Inc. – Rob Arena -IRS to Contract with Private Collection Agencies for Back Taxes

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For Help with IRS tax debt Arena and Associates can help. Rob Arena is a top advisor to people with tax debts across the country. Call for help today 303-847-4038.

Tax debt, Collection, Back taxes, harassment

IR-2016-125, Sept. 26, 2016

WASHINGTON – The Internal Revenue Service announced today that it plans to begin private collection of certain overdue federal tax debts next spring and has selected four contractors to implement the new program.

The new program, authorized under a federal law enacted by Congress last December, enables these designated contractors to collect, on the government’s behalf, outstanding inactive tax receivables. As a condition of receiving a contract, these agencies must respect taxpayer rights including, among other things, abiding by the consumer protection provisions of the Fair Debt Collection Practices Act. The IRS has selected the following contractors to carry out this program:

CBE Group
1309 Technology Pkwy
Cedar Falls, IA 50613

Conserve
200 CrossKeys Office park
Fairport, NY 14450

Performant
333 N Canyons Pkwy
Livermore, CA 94551

Pioneer
325 Daniel Zenker Dr
Horseheads, NY 14845

These private collection agencies will work on accounts where taxpayers owe money, but the IRS is no longer actively working their accounts. Several factors contribute to the IRS assigning these accounts to private collection agencies, including older, overdue tax accounts or lack of resources preventing the IRS from working the cases.

The IRS will give each taxpayer and their representative written notice that their account is being transferred to a private collection agency. The agency will then send a second, separate letter to the taxpayer and their representative confirming this transfer.

Private collection agencies will be able to identify themselves as contractors of the IRS collecting taxes. Employees of these collection agencies must follow the provisions of the Fair Debt Collection Practices Act and must be courteous and respect taxpayer rights.

The IRS will do everything it can to help taxpayers avoid confusion and understand their rights and tax responsibilities, particularly in light of continual phone scams where callers impersonate IRS agents and request immediate payment.

Private collection agencies will not ask for payment on a prepaid debit card. Taxpayers will be informed about electronic payment options for taxpayers on IRS.gov/payments. Payment by check should be payable to the U.S. Treasury and sent directly to IRS, not the private collection agency.

The IRS will continue to keep taxpayers informed about scams and provide tips for protecting themselves. The IRS encourages taxpayers to visit IRS.gov for information including the “Tax Scams and Consumer Alerts” page.

For more information visit the Private Debt Collection page on IRS.gov.

https://www.irs.gov/uac/newsroom/new-private-debt-collection-program-to-begin-next-spring-irs-to-contract-with-four-agencies-taxpayer-rights-protected

If you are contacted by IRS Collections or one of these newly contracted collection agents don’t try to handle it yourself. Call 303-847-4038 and get professional help from Arena and Associates, Inc.

Arena and Associates, Inc. – Rob Arena – Settling Tax Debts with an Offer in Compromise

Radio and television are filled with advertisements claiming that tax debts can be settled for less than what you owe. This settlement program is known as offer in compromise. This can be a great solution, provided you qualify.

In this settlement program, you are offering to pay less than the full amount to the IRS. The IRS will accept an offer in compromise if the taxpayer doesn’t have to ability to pay the amount owed or if there is doubt that the person is actually liable for the tax debt.

The IRS’ stringent acceptance standards have made it extremely difficult for most taxpayers with outstanding balances to qualify. Prepare to be scrutinized when you attempt an offer in compromise. Think of it like a tax audit. But in addition to auditing your finances, they will also be auditing your assets and liabilities. They would even calculate future income to determine if you have the ability to make continuously monthly payments.

To file an offer in compromise, the first thing you need to do is to fill out Form 433-A and Form 656. Add to that, you also need to calculate the offer amount.

You don’t want to initiate a settlement with the IRS with a ridiculous offer. There is a formula that used to calculate the offer amount. It is not simply picked out of the air.

If you choose to go this route, then you have to be very patient. Why? It’s because the negotiation process can seem to drag on forever. It may take anywhere from a few months to a few years to determine whether or not you’re approved.

It is essential that you do the math before filing an offer in compromise. Not only will you be wasting valuable time if you don’t get approved, you’ll also be wasting thousands of dollars on application fee and professional fee.

If your offer has been approved, do your best to keep it from being revoked. Be sure to file and pay your taxes on time for the next 5 years and pay the offer amount.

If you think you might be a candidate for an OIC, your best bet is to seek help from a company with experiences in such matters such as Arena & Associates Incorporated.

Arena and Associates, Inc. – Rob Arena – IRS Agent or Scammer? 5 Ways to Spot a Scam Phone Call

reflectingThe IRS has issued a strong warning for consumers to stay on guard and protect themselves from scam artists. Callers may claim to be from the IRS and demand immediate payment. Others may try to con you by saying that you’re due for a refund. But the truth is, they’re trying to trick you into sharing private information.

Many people are unable to tell the difference between a scammer and an IRS agent. Here are 5 telltale signs that you could be dealing with a scammer.  Keep these things in mind to avoid being victimized.

Payment method

The IRS will not require you to use a specific payment method. If the caller asks you to send payment through wire transfer or prepaid debit card, then you’re probably dealing with a scammer. The IRS accepts money through various forms of payment.

Demands urgent payment

Scammers make it seem like you need to settle your debts immediately. Of course, the sooner you send money, the sooner they can move on to their next victim. The IRS will give you an opportunity to question or appeal the amount they say you owe; while a scammer will not.

Threatening phone calls

Potential victims are often threatened with driver’s license revocation, arrest or even deportation. These, of course, are false threats. Some would even call back pretending to be the police to scare you.

Asking for personal information

Fake agents may know a lot about you, making it somewhat believable. They may also ask you for banking or credit card information over the phone. Don’t give out or confirm information over the phone.

Calling out of the blue

If you received a call from someone claiming to be from the IRS and asking money, there’s a good chance that it may be a bogus call. Why? It’s because the IRS always contact people about their unpaid taxes by mail, not by phone.

 

Arena and Associates, Inc. – Rob Arena – How to Settle Your IRS Tax Debts

Arena
If you owe taxes but you’re underemployed or unemployed, tax debts can be settled for less than the amount owed. Believe it or not, the IRS does realize that there are some circumstances wherein a person should not be held liable for some tax debts. Keep in mind, though, that tax settlement can only be considered if the taxpayer doesn’t have the means to pay.

Here are 2 options for reducing the amount of your tax liability.

Offer in compromise

The IRS may grant an offer in compromise if collection of taxes would cause you financial hardships, if there is doubt that the amount owed is correct or if they think the person has no capability to pay the full amount of tax owed.

Of course, you have to be able to prove that you can’t pay the full amount. Here, you will need to make an offer to the IRS and convince them that the amount of money you’re offering is equal to or greater than the amount they can collect from the sales of your assets such as automobiles, real estate properties, investments etc.

You also need to pay a $150 application fee to request an OIC. That payment will go to the tax debt if the application is not approved.

Partial payment installment agreement

If you can’t pay your taxes in full, but you will likely have the money to pay it in the future, you can negotiate for an installment payment plan. Here, you’ll make regular monthly payment to the IRS over a certain period of time, but this amount will be less than what you owe. A portion of your debt is forgiven after the terms of the installment agreement are fulfilled.

The monthly payment is typically based on what you can afford after taking into account your living expenses. This can be easier and less time-consuming than requesting for an OIC.