The Internal Revenue Service (IRS) offers a variety of tax settlement options to Oklahoma residents. The Internal Revenue Service may agree to negotiate tax repayment with one of their programs if they believe it will allow an Oklahoma tax payer to repay their IRS tax debt and give them the ability to pay all future tax obligations.
Oklahoma residents who have Internal Revenue Service tax debt should contact a tax professional such as a tax accountant, enrolled agent or tax attorney who can help file past tax returns, provide information on the various tax settlement plans and stop harassment by the Internal Revenue Service.
Offer in Compromise in Oklahoma
One of the most popular tax settlement options used by the Internal Revenue Service to collect IRS tax debt is Offer in Compromise. Offer in Compromise is an offer made by the taxpayer to the Internal Revenue Service to settle back tax debt for a fraction of the full amount.
The Internal Revenue Service does not accept all Offer in Compromise offers and a series of negotiations or appeals is not uncommon before an OIC offer is accepted. The Offer in Compromise may not be the best option for every Oklahoma taxpayer. It can be expensive and time consuming and if the Offer in Compromise offer is denied, the IRS will have detailed information about the taxpayer’s financial situation.
An Offer in Compromise will only be granted if an Oklahoma taxpayer meets one of the following conditions:
- Effective Tax Administration- Oklahoma residents who can prove that meeting their tax debt obligation may cause “an economic hardship which is unfair and inequitable” may qualify for an Offer in Compromise. The Internal Revenue Service most often accepts this condition for the elderly and the handicapped.
- Doubt as to Collectibility – Under certain conditions the Internal Revenue Service will conclude it is too costly or difficult to collect tax debt. This condition is not the same as doubt as to liability because the amount of debt owed is not in question, only the ability of the Internal Revenue Service to collect the debt.
- Doubt as to Liability- Certain Oklahoma residents may have evidence that the amount of tax debt assessed is incorrect. If the Internal Revenue Service agrees, they may accept an Offer in Compromise.
In addition to the conditions above, Oklahoma taxpayers must also complete the following tasks to qualify for an Offer in Compromise:
- Oklahoma taxpayers must complete the payments as outlined in the Offer in Compromise agreement
- Oklahoma taxpayers must pay all federal taxes by the tax deadline for the next five years
- Oklahoma taxpayers must complete and file their federal tax returns on or by the federal tax deadline
- The Internal Revenue Service will apply all tax refunds to the taxpayer’s outstanding tax debt
Another common tax settlement option is the installment agreement. Installment agreements allow Oklahoma residents to repay their federal tax obligations with monthly installment payments. The type of installment plan or method of repayment can be different depending on the amount of tax debt owed. Oklahoma taxpayers who owe $10,000 or less, not including taxes and penalties, may use a guaranteed installment plan. Under this plan the federal tax debt must be paid with in three years.
Oklahoma taxpayers who owe less than $25,000 can use a streamlined installment agreement. Payments must be made with in five years. Oklahoma taxpayers who owe more than $25,000 should contact a tax professional to negotiate repayment.
Oklahoma residents must complete the following tasks to qualify for an installment agreement:
- Complete and submit all quarterly tax estimates if self-employed
- File all federal tax returns- past and present
- Pay all IRS tax debt for the 5 years prior to the current IRS debt which can not be paid
- Taxpayers can not have another installment agreement with the Internal Revenue Service for the previous five years
Partial Payment Installment Agreement
Oklahoma residents who can only pay partial payments may be able to use the Partial Payment Installment Agreement developed by the Internal Revenue Service. The PPIA will stop the Internal Revenue Service collection actions, but interest and penalties will continue to accrue. The Internal Revenue Service will review the Partial Payment Installment Agreement every two years to determine if the taxpayer should pay more or if the plan can be stopped.
Currently Not Collectible
Due to the economy or uncertain financial crises, certain Oklahoma residents may not be able to repay their tax debt using any type of installment plan. The Internal Revenue Service may be willing under certain extreme conditions, to declare their IRS tax debt currently not collectible.
Currently not collectible will not erase the tax debt and interest and penalties will continue to accumulate, but the tax collection efforts will stop and the Internal Revenue Service will release levies. Currently not collectible status may allow Oklahoma taxpayers the opportunity to regain their financial footing.
Oklahoma taxpayers may be assessed penalties for a variety of reasons including: not paying tax debt by the tax deadline, falsifying a tax form, falsely requesting a tax refund or intentionally or accidently providing incorrect tax data. Certain tax penalties may be dismissed or eliminated if the Oklahoma taxpayer can provide a valid reason to request the abatement. Not all penalties can be dismissed.
Do I Need Tax Professional?
Oklahoma residents who owe federal tax debt have a variety of tax settlement options to consider. Tax professionals have the expertise to review financial data and determine which option may be best for the taxpayer. Tax professional also can provide a variety of tax services including: filing past tax forms, lowering or minimizing a taxpayer’s tax liability, or helping an Oklahoma taxpayer avoid bankruptcy.