Connecticut taxpayers have a variety of options to settle their federal back taxes. The Internal Revenue Service has been given the authority by the United States federal government to negotiate with Connecticut taxpayers to help them pay their IRS back taxes and put them in a position to meet their future tax obligations.
Connecticut tax payers who are considering a tax settlement plan should consult with a tax professional who can provide a wide variety of tax services such as filing tax returns, limiting business or professional tax liability and outline tax settlement plans. The Internal Revenue Service can use a variety of collection methods to harass you and your family but tax professionals are available to help.
Offer in Compromise in Connecticut
Connecticut tax professionals can substantially lower their tax debt with Offer in Compromise. Offer in Compromise (OIC) is a tax settlement option which allows the taxpayer to make an “offer” which the Internal Revenue Service can deny or accept to settle past tax liability. Not all Offer in Compromise offers will be accepted, in fact, up to 80% are denied at the OIC application level. The Internal Revenue Service will also request a large amount of detailed information which may allow them to continue their aggressive collection tactics if the Offer in Compromise is denied.
Connecticut taxpayers must meet the following criteria to file an Offer in Compromise:
- Doubt as to Liability- Under certain conditions, Connecticut taxpayers may doubt the amount of tax debt they owe. The Internal Revenue Service may grant an Offer in Compromise for this reason. This condition is not frequently used.
- Doubt as to Collectibility- Connecticut taxpayers may suffer unexpected financial hardships which will not allow them to pay federal tax debt. If the Internal Revenue Service decides they will not be able to collect IRS tax debt, they may grant an Offer in Compromise. Under this condition only the ability to collect is questioned, not the amount of tax liability owed.
- Effective Tax Administration- Certain Connecticut taxpayers may not be able to pay their federal taxes with out “economic hardship which is unfair and inequitable”. If the Internal Revenue Service agrees, they may grant the Offer in Compromise. This condition is most frequently used for the handicapped and the elderly.
In addition to the conditions listed above, Connecticut taxpayers will have to complete the following actions to qualify for Offer in Compromise:
- Connecticut taxpayers must fulfill all responsibilities outlined in the Offer in Compromise offer.
- Connecticut taxpayers must pay all their tax liability on or before the tax deadline for the next five years.
- Connecticut taxpayers must file their federal tax returns on or by the tax extension deadline.
- All tax refunds will be applied toward the Connecticut taxpayer’s IRS outstanding tax debt.
The Internal Revenue Service offers installment agreements to Connecticut taxpayers to repay their federal tax debt in monthly installments. Plans and methods of payment can vary depending on the amount of tax debt owed. If the Connecticut taxpayer owes $10,000 or less, not including interest and penalties, the IRS offers a guaranteed installment plan which requires the amount to be paid in three years.
If the Connecticut taxpayer owes less than $25,000 the Internal Revenue Service offers a streamlined installment agreement which must be paid with in five years. If tax debt is greater than $25,000, Connecticut taxpayers should consult a tax professional.
Connecticut residents who are considering a monthly installment agreement must do the following:
- All self-employed taxpayers must file quarterly tax estimates
- All past federal tax returns must be filed
- All past IRS tax debt must be paid for the five years before the period outlined in the Offer in Compromise
- Connecticut taxpayers can not have made installment plans with in the last five years
Partial Payment Installment Agreement
Connecticut taxpayers who can not use the monthly installment plan may qualify for the Partial Payment Installment Agreement (PPIA). If the Internal Revenue Service accepts your PPIA plan, they will stop their collection actions. The Internal Revenue Service will continue to monitor the Partial Payment Installment Agreement every two years and may determine the amount to be paid can be increased or the PPIA can be terminated.
Currently Not Collectible
The Internal Revenue Service may determine IRS tax debt is not currently collectible. If you are a Connecticut Taxpayer who can not use any other tax settlement option, the IRS may be willing to stop their collection efforts and release tax levies if certain criteria are met. Unfortunately, if the Internal Revenue Service labels the federal tax debt as currently not collectible, the tax debt does not go away and interest and penalties will continue to accrue.
Connecticut taxpayers, who have been assessed tax penalties on their outstanding tax debt, may be able to petition the Internal Revenue Service to dismiss the penalties through penalty abatement. Penalties may be given for failing to file a tax return, falsifying the tax information, falsifying refund information or misrepresenting financial data on a federal tax return. Not all penalties will be dismissed. The Internal Revenue Service will only dismiss penalties if the Connecticut taxpayer has a valid reason.
Do I Need Tax Professional?
Connecticut taxpayers who are considering a tax settlement options, can contact a tax professional for help. Tax professionals can also help with a variety of other tax services such as lowering a taxpayer’s tax liability, eliminating the need to file bankruptcy, or filing past tax forms. If your possessions are repossessed, your wages have been garnished or the IRS has levied your bank accounts, a tax professional can help.