Tax Liens

The Internal Revenue Service is allowed under federal law to place a tax lien on your personal property, real estate, bank accounts and personal possessions to settle back taxes. The tax lien allows the IRS to ...

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How long does it take for an offer in compromise to be approved by the IRS?

An offer in compromise is a settlement option offered by the Internal Revenue Service (IRS) that may allow a taxpayer to address their federal income tax liability for an amount less than the full amount owed.  If you are considering making an offer in compromise, keep in mind that there is no set timeframe by when the IRS will generally approve the offer.  The length of time it takes for the IRS to approve an offer in compromise varies from case to case, but in general, you can expect it to take anywhere from six to twelve months.  If the IRS has not approved or rejected your offer in compromise within two years from the date when the IRS receives the offer, then the IRS is required to accept the offer.

You may surprised that it generally takes up to a year to complete the offer in compromise process.  The lengthy amount of time can be caused for several different reasons:

Initial Assignment and Review. The IRS generally receives a large number of offers in compromise in a given tax year, and the IRS has a limited number of caseworkers who work on these offers.  Therefore, it may take some time before the specific details of your case are assigned to a caseworker for the review process to begin.

Request for Additional Information. Once an IRS caseworker begins to review your offer in compromise, they may determine that your offer is not complete.  This could be because you have not completed all the necessary application forms, you did not include the necessary fees required with the offer, you have not included documentation necessary to support your reason for requesting an offer in compromise, or they have other questions about your offer for which they need an answer.

Rejection and Appeal. If the IRS caseworker makes the decision to reject your offer in compromise (offers are usually rejected because the IRS considers the offer to be too low based on the income and other assets you disclosed as a part of the offer), you can appeal the decision.  Once you complete the required forms to initiate the appeals process, your appeal likewise takes time for the IRS to consider.  Alternatively, depending on the reason the IRS rejected your offer, you may choose not to appeal the rejection but rather to file a new offer in compromise

What if I need help submitting or appealing an offer in compromise?

A tax attorney can help you with your offer in compromise.  An attorney will have the training and experience to know the types of situations for which the IRS generally accepts offers in compromise, as well as the support you will need to include with your offer for it to be seriously considered.

If you complete the short form below, a professional tax attorney will  review your case free of charge.  This review is 100% confidential and does not obligate you to anything further, so you should get this initial evaluation to help determine the appropriate next steps for your tax situation.

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How do I know the IRS will accept my settlement proposal?

If you have a tax liability with the Internal Revenue Service (IRS)—that is, you owe money to them—you may be considering a settlement proposal, especially if you have been as hard hit by the economy, job loss, or other factors as many other Americans have been.  A settlement proposal is when you offer to address your tax liability in a manner other than paying the total amount due when it is due.

When you are submitting a settlement proposal to the IRS—whether your proposal is an installment plan, an offer in compromise, or a different payment option—there are several important steps you can take to improve the chances the IRS will accept your proposal:

File all tax returns due. If you have not filed your federal income tax return for one or more years, including the current tax year if the filing date has passed and you have not filed for an extension, then the IRS will automatically reject most settlement proposals.

Submit completed forms including fees. For each of the IRS’ available formal processes for submitting different types of settlement proposals, the IRS has specific forms that it expects you to fill out completely and turn in.  Even within a given settlement option, there may be one or more different forms to submit depending on your circumstances.  And along with these forms, you generally need to include the appropriate supporting documenting and filing fees.  If any of the forms, supporting documentation, or filing fees are not in order, the IRS may automatically reject your settlement proposal.

Submit your best offer. When you submit a settlement proposal, the IRS expects that while it may not be for the full amount of the tax liability you owe, they expect that it will be the maximum amount you can afford to give them.  When the IRS reviews your income, expenses, and overall situation as a part of your settlement proposal, if it is obvious you can afford to pay more than your offer, the IRS will reject your proposal.

Provide support. As noted above, the IRS generally requires supporting documentation as proof that, rather than you paying your full tax liability, you need to use a settlement proposal.  The IRS has specific reasons for when it will accept a settlement proposal.  If your reason and the supporting documentation do not establish that it is for a legitimate reason, the IRS will not accept your proposal.

Follow your settlement agreement as though it has been accepted. While the IRS is considering whether it will accept your settlement agreement, they expect you to begin making payments to them according to your submitted plan as though the settlement agreement has already been accepted.  Failure to make these payments will results in the IRS declining you proposal.

How can I get help in making sure my settlement proposal will be accepted by the IRS?

While there is no guarantee that a settlement proposal to the IRS will be accepted, you can increase the likelihood of your proposal being accepted by leveraging the knowledge and experience of a tax attorney.  A tax attorney will understand the settlement proposal options available to taxpayers, the specific situations that allow a taxpayer to qualify for each of the settlement options, and how to submit a settlement proposal that meets the criteria to qualify for the chosen options.

If you complete the short form below, a tax lawyer will review your situation free of charge and provide guidance you can use to make the decision best for you.  This review is 100% confidential and free of charge, so please get help today in determining what settlement proposal options is best of your tax  situation.

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What do I do about the notice I received from the IRS?

If you receive a letter from the Internal Revenue Service (IRS), it could be for one of a variety of reasons.  Remember that it may not necessarily be a bad thing—it could just be an informational letter—so you need to start by taking a few minutes to read the letter carefully to understand the purpose.

At one time, receiving a letter from the IRS could be a confusing prospect, as it contained technical terms that might be difficult for many to understand.  However, the IRS has taken steps to redesign its letters so they are easier to understand.  Each letter should clearly state the reason you have received the letter and what steps you must take to address the issue.

In addition, the IRS has created a reference number you can use to find additional information about the reason you received the letter.  This reference number will be in the top right corner of the letter.  You can look up additional information about this reference number on the IRS’ web site at http://www.irs.gov/individuals/article/0,,id=96199,00.html.

Following are a few of the common reasons why the IRS sends notification letters to taxpayers:

  • Reminder – The IRS has sent you a previous letter asking you to take action on a situation.  This letter serves as a reminder that you have not completed the necessary steps.
  • Overpayment – Because of an error found on your return, you have overpaid your taxes and are due a refund of the overpaid amount.
  • Balance Due – As the result of changes to your return because of a miscalculation, an amendment, an audit, or for other reasons, you now have an outstanding tax liability.  You will need to pay the balance due or contact the IRS to work out payment plan options.
  • Notice of Default – You have previously entered into some form of payment plan with the IRS to pay your tax liability, but you have failed to meet the terms as agreed to with the IRS.

If you agree with the notice and it does not specifically indicate you must take action to address an open issue, you do not have to respond or take any further steps.  However, if the letter indicates you should take action, regardless of the reason you received the letter, you should not ignore it.  Ignoring a letter from the IRS that requests action can make a bad situation much worse.  If you are unsure if you need to take action based on the letter or are unsure what the IRS is asking of you, you should seek professional help to be sure the appropriate steps are taken.

How can I obtain help with the notice I received from the IRS?

Professional help in reviewing your tax situation or a letter received from the IRS is close at hand.  If you complete the short form below, a tax attorney can review your situation and evaluate what action you need to take as a result of the letter.  This review is 100% confidential and free of charge.  Therefore, there is no reason to try to handle the situation with this free consultation from a tax professional.  Please complete the form today.

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What is the process for submitting an offer in compromise?

An offer in compromise is one of the payment options defined by the Internal Revenue Service (IRS) whereby the IRS is willing to accept less than the full amount of tax due from a taxpayer.  To submit an offer in compromise, you must provide the following four items as outlined on the IRS’ web site at http://www.irs.gov/individuals/article/0,,id=243822,00.html:

The application fee and first payment are non-refundable, but the IRS will apply them against the taxpayer’s tax liability.  While the IRS is considering the offer in compromise, the taxpayer must begin making payments according to the office in compromise payment plan.

While the steps for actually submitting an offer in compromise may be straight forward, providing the necessary information to convince the IRS to accept the offer can be more difficult.  The IRS considers an offer in compromise as a last resort of sorts from their perspective in collecting taxes, since they are settling for less than the full amount due from the taxpayer.  The IRS would prefer to collect the full amount of tax due by collecting the full payment in a lump sum.  Likewise, an installment agreement where the balance due is paid to the IRS over time works in the IRS’ favor, as the IRS collects the full balance due plus interest and penalties.

But the IRS also wants to keep the taxpayer in the system.  If the IRS believes a taxpayer is not capable of paying the full amount, the IRS will consider an offer in compromise if they believe it still represents the maximum amount they can collect from the taxpayer in a reasonable time.  The responsibility for convincing the IRS that the taxpayer’s offer is an acceptable amount for the IRS to collect rests with the taxpayer.

Can a tax attorney help me set up an offer in compromise?

Yes, a tax attorney will have experience in completing the required steps for the IRS to consider your offer in compromise, as well as the types of situations that lead the IRS to be more likely to accept an offer in compromise.  The IRS generally considers an offer in compromise for two reasons: you do not have the finances necessary to pay the full amount of taxes due or payment of the full amount of taxes due would create an unfair hardship on the part of the taxpayer.

In either scenario, a tax attorney will be able to evaluate if your situation is one that may qualify for an offer in compromise.  An attorney can also help you to provide the necessary documentation to establish your position in the eyes of the IRS.

If you complete the short evaluation form below, a tax attorney will be able to review your situation to determine what payment option makes sense for you.  This review is 100% confidential, free of charge, and does not obligate you to anything more.  Therefore, complete the form and seek professional help today in determining if an offer in compromise is the best approach to address your tax liability.

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What is an installment agreement and how does it work?

At some point in your life, when you calculate your federal income tax, you may be shocked at the amount of tax due.  Whether because of an unusual increase in income, unexpected gains on an investment or property sale, or the loss of a job, you may find that the amount of tax due is more than you can afford to pay.  If that is the case, you are not the first person who has had that experience.  The Internal Revenue Service (IRS) likewise has experience with these matters.  The IRS understands that unexpected things can happen in a taxpayer’s life that make paying your tax debt in one lump sum difficult.  Therefore, the IRS has established a payment option that may allow you to change the timing of paying your taxes.  Such an option is known as an installment agreement.

An installment agreement is when the IRS allows you to pay your tax debt in a series of payments rather than as a lump sum.  As noted above, this gives an advantage to the taxpayer in that the payment can be made over time rather than all at once.  However, there is a disadvantage to the taxpayer as well: an installment agreement costs more than a lump sum payment.  For an installment agreement, the IRS charges a one-time setup fee as well as interest and penalties on the unpaid balance of the taxes you owe.  The setup fee is $43 for qualified low-income individuals.  For everyone else, the setup fee is $52 for agreements where you set up a direct payment (e.g., payroll deduction, electronic transfer from bank account) or $105 where you set up a non-direct payment (e.g., personal check, business check, money order).

If you wish to set up an installment agreement, you can call the IRS and they will walk you through the process.  Depending on how much you owe, the IRS may ask for information to establish your financial position, to be sure you are in a situation where you can pay the full amount owed.  Additional financial information may be required when your tax debt is more than $25,000.  Once you complete the application process, the IRS will review and approve or deny the installment plan request.

Once you have set up an installment agreement, you simply make the monthly payments throughout the agreed-upon term of the plan.  If you miss a payment, the IRS will charge you a fee of $45 to re-establish the plan.

Should I set up an installment agreement with the IRS?

Maybe.  While an installment agreement allows the taxpayer to spread out the tax debt over time, it costs the taxpayer more money in total.  Therefore, before you enter into an installment agreement, you should explore all the payment options available to determine which one is right for you.  For example, your situation may allow you to qualify for an offer in compromise, which allows you to pay less than your full amount of taxes due.  A tax attorney will have experience with installment agreements, offers in compromise, and other methods of making payments to the IRS than can lessen the pressure of making a lump-sum payment of all the taxes you owe.

By filling out the short evaluation form below, a tax attorney will be able to review your situation to determine what payment option makes sense for you.  This review is 100% confidential, free of charge, and does not obligate you to anything more.  Therefore, complete the form and seek professional help today in helping to address your tax burden.

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What is an offer in compromise?

An offer in compromise is an agreement between a taxpayer and the Internal Revenue Service (IRS) whereby the IRS accepts less than the full amount owed to resolve a tax debt.  The IRS may consider an offer in compromise in the following circumstances:

  1. Doubt of collectability. When the IRS does not believe it will be able to collect the full amount of tax owed, it may accept an offer in compromise from the taxpayer.  Doubt of collectability can be because the taxpayer does not currently have the assets to pay the total tax amount, nor does the IRS believe the taxpayer will have the assets to pay the tax owed in the foreseeable future before the statute of limitations is reached.
  2. Special circumstances. A special circumstance is when the payment of the full tax debt will create a financial hardship for the taxpayer.  Once example of a special circumstance noted on the IRS’ web site is in the event of a serious illness.  The IRS may consider special circumstances even if the taxpayer has the assets to pay the full amount of the tax debt.

To be considered for an offer in compromise, the taxpayer must complete and submit the offer in compromise form found on the IRS’ web site at http://www.irs.gov/pub/irs-pdf/f656.pdf, along with a non-refundable $150 fee.  If the taxpayer’s offer in compromise proposal is accepted, the $150 fee is applied to the tax debt owed by the taxpayer.

When submitting an offer in compromise, the taxpayer must specify the amount of the offer, the reason the IRS should consider an offer in compromise (along with additional documentation supporting the taxpayer’s position), and the payment option the taxpayer will use.  The IRS allows for the following payment options for an offer in compromise:

  1. 20% of the total offer with the remaining balance paid in five or fewer payments
  2. The total offer paid in more than five equal monthly installments

Regardless of the payment option chosen by the taxpayer, the taxpayer must usually begin making payments according to the proposed offer in compromise plan while the IRS determines if the offer in compromise proposal is acceptable.  The one exception to this is if the taxpayer qualifies for low-income certification, which is granted if the taxpayer’s gross household income falls under a defined threshold.  Low-income certification allows a taxpayer to make no payments on the tax debt while the IRS is considering the offer in compromise proposal.

How can I know if the IRS will accept my offer in compromise?

In determining the acceptability of an offer in compromise, the IRS considers your income, expenses, assets, and overall circumstances that may affect your ability to pay.  Determining what situation is or is not acceptable is difficult if you do not have the training and experience to understand how offer in compromises work.  A tax attorney can help you with your offer in compromise, as he has experience in working with clients in similar situations who have had offer in compromise proposals accepted.

If you complete the short evaluation from below, a tax lawyer will review your situation free of charge to determine if an offer in compromise is an option for you and what amount the IRS may be willing to accept.  The review is 100% confidential and there is no obligation to you.  Therefore, seek professional help today in evaluating if an offer in compromise can be used to help lessen your tax burden.

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New York property tax, part 2

Continued from How do I fight property taxes in New York?

But what if I’m already behind on property taxes?

The is the second part of the answer. Unfortunately, the short answer is: It depends.

It depends on how far behind you are–and here’s why, according to a state FAQ page about property tax:

Q: What if I can’t pay my property tax bill?

A: It is the duty of all property owners to pay their property taxes. Counties and cities generally enforce their own delinquent taxes; if payment is not received during the 30-day penalty-free period, then the Redemption Phase begins. The Redemption Phase can last two years, and the property owner has the chance to pay the overdue taxes, plus all other charges and interest. If the bill is still unpaid, then the Intermediate Phase notifies the public that a judicial tax enforcement proceeding may be commenced. The Foreclosure Phase is last; the court grants the enforcement entity permission to execute a deed conveying title to the tax district (the tax district may sell the property to recoup the taxes and penalties). More information is available at the county Treasurer’s Office.

There’s time, but clock is ticking–while penalties and interest piling up

In other words, if you can foresee not being able to pay your property tax, you have some amount of planning time; you may want to consider the cost/benefit of going ahead and hiring a property/tax attorney. A trained, experienced can help you create a plan to avoid any penalties. Obviously, that would be ideal. Alternatively, if you are already in the Redemption Phase, it’s time to at least consult an attorney, even if only for one visit. That being said, the nearer you are to the end of the Redemption Phase and closer to the Intermediate Phase,  it’s probably time to bite the bullet and hire the best attorney you can find.

At this point you’re not even hoping for a general practice attorney but instead a specialist who knows up-to-the-minute, New York property and tax law inside and out.

Tax authorities don’t need ‘mortgage note’ to foreclose

Think of it this way. Once you’re in the Foreclosure Phase, depending on the particular situation, it may be too late for even the most technical attorney to be of much help. Remember, a foreclosure of this type is much different than those much-ballyhooed scandal of mistaken foreclosures foisted on the market by the big-bank, mortgage industry. Of course, it’s ALWAYS worth consulting a good attorney when you get in these situations, so don’t simply give up.

Report details high cost of rising taxes

Another to remember is that you’re not alone in feeling the burden of high property taxes. Following are some bullet points from a report by the New York State Comptroller:

  • The property tax is by far the largest tax imposed by local governments in the State, representing 79 percent of all local taxes outside of New York City.
  • Per capita property tax burdens in New York are 49 percent higher than the national average and property taxes measured as a share of personal income are 28 percent higher.
  • This disparity is even greater for taxpayers in most of the State, since New York City’s property taxes are relatively low compared with other local governments (because it collects revenue from a number of other local taxes, including a personal income tax).
  • Local property tax levies grew by 60 percent from 1995 to 2005, more than twice the rate of inflation during that period (28 percent). Most of this growth occurred in the [past] 5 years – when property tax levies increased by 42 percent, compared to inflation of 13 percent.

In summary, a financial planner or CPA might help, and it could be useful to make sure your local governing body is not planning on overriding the tax cap, but once you realize you will have problems paying your property tax bill, your best bet is to contact a trained attorney, as soon as possible, to get a legal assessment of your individual situation.

Contact a tax attorney today, get answers within 24 hours

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How do I fight property taxes in New York?

Even with the new tax cap, New York’s property tax rates among highest in country

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The new property tax cap law

You may be one of the homeowners who were glad to see Gov. Andrew Cuomo succeed in getting passed a bill that caps property taxes at 2 per cent per year (or the rate of inflation, whichever is less), with emergency clauses to be to handle judgments from a lawsuit (tort action) or unexpected year-to-year contributions for pension funds.

Also included in the legislation were methods to override the cap: According to a state .pdf document, “The Property Tax Cap: Guidelines for Implementation,”The tax levy cannot exceed the cap unless 60 percent of voters (for school districts) or 60 percent of the total voting power of the governing body (for local governments) approve such increase.”

That may seem backward: School districts have been hard hit through the years, as the state “kicked the can” to local districts, and now this new cap has to be defeated by–not merely a majority but also by–an overwhelming majority of voters. Yet, on whichever local board may oversee property taxes, that may require only a 4-person majority on a 6-person board.

Some localities already overriding the cap–or looking to do so

According to an Oct. 5 story in the Ithaca Journal, “Tompkins County is the first county in New York to override the state’s property tax cap, after the legislature voted Tuesday to approve a local law authorizing itself to raise the tax levy more than the state’s limit.

“The tax cap, new this year, limits municipalities, counties and school districts to tax levy increases of 2 percent, plus some limited exceptions that increase individual entities’ limits, some up to more than 4 percent.

“Tompkins County’s tax cap would be 2.9 percent.

“Mark LaVigne, deputy director of the New York State Association of Counties, confirmed Wednesday that no other county has approved an override of new law, though others have started the process.”

Note: As alluded? The county legislature’s vote to override the state cap was 9-6. So far, no word from Tompkins County on scheduling a popular vote for the school district.

However, at least one recent editorial warns local boards about going against the grain of popular will:

But, any board members who try to bust the cap because they don’t think they can deliver a budget that meets the law better seriously think about the public reaction. It won’t be pretty. Property owners are fed up with higher taxes, and they didn’t come out strongly for the cap only to see it ignored. Boards that don’t deliver what the taxpayers were promised — whether they supported the cap or just had it thrust upon them by the state — can likely expect political repercussions. And if any school board thinks voters will get behind the idea of exceeding the cap, well, they are going to get a surprise next May.

Fighting back

OK, so this will be a two-part answer. Number one, as a New York state homeowner (New York City has different considerations, as might be expected), your mission for prevention is political. Basically, you need to be–or become–part of the lobby that matters in regard to your county tax authority. Teachers, educators and “school people” probably have a tougher job, because of the perception that teachers have “cushy jobs” with much time off and strong pension/retirement plans: your mission is a “win the hearts and souls” of the public, in order to increase the rate for schools via a 60 per cent margin at the polls.

Continued in Property Taxes in New York, Part 2: What if I already owe back taxes?

Get answers to specific questions about New York property tax law.

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What should I do if I cannot afford to pay my taxes?

So you have calculated your federal income taxes and found that you owe the Internal Revenue Service (IRS).  Perhaps you owe them a large amount, and you cannot afford to pay them the amount owed.  What do you do?

The best thing to do is to still file your tax return on time.  Even if you cannot afford to pay your taxes, filing your return is still the best option for several reasons.  If you intentionally choose not to file your return altogether, the IRS will impose penalties on you in addition to the taxes you owe.  These penalties can include fines for missing the due date for paying your taxes and interest charged on the unpaid taxes.  If the IRS needs to escalate the collection of the taxes due, they can seek to obtain a judgment against you, possibly garnishing your wages and seizing your assets (excluding your home and business, which are protected from seizure by the IRS).  The IRS may even seek to throw you in jail, although this is generally only in extreme situations of tax avoidance, as the IRS knows that if you are in jail it may be more difficult if not impossible for you to raise or earn the money needed to pay your tax bill.

Remember that if you cannot pay your taxes, you are not the first or only one in this situation.  Because the inability to pay taxes due is not uncommon, the IRS has established payment options for taxpayers who legitimately cannot afford their tax bill.  These options include:

  1. An extension, which is simply moving the due date for tax payment further out into the future,
  2. An installment plan, which is paying the tax bill in a series of payments over a period of time rather than as a lump sum, and
  3. An offer in compromise, which is when the IRS accepts partial payment for the total tax bill in lieu of the full payment.

For the IRS to make these payment options available to you, you must first do your part and file your return.

Should I hire a tax attorney?

If you cannot pay your taxes, a tax attorney will have the knowledge of how the various payment options work and if your situation will allow you to pursue one of them.  Even though these options provide time for the taxpayer to make payment, the IRS generally charges interest on the unpaid taxes.  And the IRS may seek proof of your financial inability to pay your tax bill before they will allow you to pursue some of these relief options.  Therefore, having a tax attorney on your side is a wise decision.

If you complete the short evaluation from below, a tax lawyer will review your situation free of charge.  The review is 100% confidential and there is no obligation to you.  Seek professional help today in evaluating your options for working with the IRS to settle your unpaid tax bill.

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Complete the Free Tax Case Evaluation form below and an experienced Tax Professional will contact you to discuss your situation. Don't Wait -- Get Help Today!


What is the Automated Collection System of the IRS?

If you owe a balance to the Internal Revenue Service (IRS) or have not filed a tax return for one or more prior years, you have likely received a series of phone calls and letters from the IRS to follow up on the taxes due.  While initial follow up from the IRS may be performed by a person, the majority of follow up with the taxpayer is handed off to a computer system within the IRS known as the Automated Collection System, or ACS.

The ACS, which is often misnomered the Automated Collection Service, is a computer system that tracks the balance due of taxpayers and the status of all delinquency investigations.  The ACS also maintains information the IRS has on the taxpayer that may be useful in obtaining a balance due or delinquent amount.  This information can include but may not be limited to the taxpayer’s name, address, Social Security Number, employer information, bank account information, real estate information, automobiles owned, and any monthly income and expenses.  In short, the ACS provides a system whereby the IRS can track all your assets and income sources to gain a better picture as to how readily you can pay any tax due.

The ACS uses the known information about the taxpayer to prioritize the file for follow up by mail or phone call (transferring the phone call to a live agent if contact is made) and for issuing letters indicating collection steps are being initiated or have been taken, such as the issuing of a levy.  In addition, the ACS fields incoming phone calls and transfers them live agents, again with the goal of gathering information to move the taxpayer’s file toward collection.

What if I receive a notice from the Automated Collection System?

If you owe back taxes to the IRS or have not filed one or more prior returns, the IRS through use of the Automated Collection System can be notoriously diligent at continuing to follow up with you and escalating the matter to receive a resolution.  This resolution can include the placement of lines on your property and the garnishment of your wages.

The rules under which the IRS operates can be difficult to understand and any information you provide to the IRS can be used to build the file the ACS maintains to assist with collection of amounts due.  Therefore, you would be wise to seek the advice of a tax attorney.  A tax attorney understands federal tax laws, can answer your questions about past due federal tax returns, and can advise you of your rights.

Complete the short evaluation form below and a tax lawyer will review your situation free of charge.  The review is 100% confidential and there is no obligation.  If you owe delinquent tax, with the help of a tax attorney, it is not unusual to negotiate a settlement plan in which you pay less than the full amount owed.  So please seek help today.

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