An “offer” is defined by Merriam-Webster’s online dictionary (http://www.m-w.com) as “a presenting of something for acceptance” and “compromise” is defined as “a settlement of differences by arbitration or by consent reached by mutual concessions.” When you put those two definitions together, you do not really get the true meaning of what an IRS Offer in Compromise (OIC) is, but you get pretty close. An IRS OIC is a written agreement between the taxpayer and the Internal Revenue Service (IRS) that allows the taxpayer to pay a reduced amount in full satisfaction of his IRS tax liability, penalties and interest.
The IRS has several types of offers in compromise based on the type of situation you find yourself in, you may qualify for more than one, however, the IRS is only able to grant your OIC based on one of the grounds. The grounds for Offers in Compromise are based on: (1) doubt as to liability, (2) doubt as to collectability, and (3) for effective tax administration. An offer based on doubt as to liability would be filed when the taxpayer believes he does not owe the tax. An offer in compromise based on effective tax administration would be filed when, even though the taxpayer has assets and/or income to full pay their tax liability, but there is a good reason to allow them to settle their tax liability for less than the full amount owed. Finally, we will consider the offer in compromise based on doubt as to collectability in much more detail in this manuscript. The offer in compromise based on doubt as to collectability is filed when there is no contention that the tax is owed, however the taxpayer does not have the assets or future income to full pay the liability.
I have just wrapped up a series of posts analyzing seven factors the IRS considers when determining whether a worker is an employee or an independent contractor. The incorrect classification can have enormous tax implications for both the employer and the worker so it is important that you pay close attention to how a worker is classified or you may be stuck with a giant tax bill that you didn’t count on.
Here is the list of the seven posts:
1. Control
2. Capital
3. Opportunity
4. Right to Discharge/Fire
5. Integral Nature
6. Permanence
7. Intent
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My last post talked about the first factor used by the IRS in determining whether or not a worker is defined as an employee (and therefore income tax withholdings are due from the employer) or an independent contractor and the worker is responsible for their own income taxes.
The second factor is "Capital." In essence what this factor is analyzing is who is investing in facilities, tools, etc. for the worker? If the employer provides all of the tools, financing, and office space to the worker they may likely be an employee. However, if the worker provides his own tools and facilities where his work is performed, he is likely an idependent contractor.
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I have had several visitors to my site recently who found my site with the following query:
“i have filed my income taxes but do not have the money to pay what is the irs statute of limitations”.
The main question being asked in this query is what is the IRS statute of limitations for collecting tax liability that I owe. I have answered this question several times before on this blog, see the posts below:
IRS Statute of limitations Post 1
IRS Statute of Limitations Post 2
IRS Statute of Limitations Post 3
Essentially, after the IRS has assessed taxes against you - and in most cases your tax returns are filed before the taxes to be assessed (as stated in the search engine query) - the IRS may collect those taxes from you for ten years from the date of assessment. The date of assessment varies depending on when you filed your tax returns. If you filed your 1996 tax return in March 1997, the tax was assessed on April 15, 1997 and therefore the collection statute of limitations would have expired on April 15, 2007. If this is the case for you, then the IRS may no longer harass you or collect from you for those taxes.
If you are still receiving collection letters for taxes that are older than ten years there may be a valid reason. I can assist you in determining how much longer the IRS may collect taxes from you for various years. Please visit the contact page and send me an e-mail or call me to discuss how I can help you out in your situation.
Phillipians 3: 12-14: 12Not that I have already obtained all this, or have already been made perfect, but I press on to take hold of that for which Christ Jesus took hold of me. 13Brothers, I do not consider myself yet to have taken hold of it. But one thing I do: Forgetting what is behind and straining toward what is ahead, 14I press on toward the goal to win the prize for which God has called me heavenward in Christ Jesus.
In difficult times, we must forget about the past and move on toward the goal that Christ has called us to. This should be applied to our everyday life. For me, I have to forget about the situations and circumstances that placed me into the position of leadership and stress that I am in now. Rather than learning the ropes for several months or years, I was thrown in to manage an established law practice after only a few months of learning the ropes. I am pressing on, for I know the end of the trial is near, and I am learning more and more. I have to know that Christ has a purpose for this. The Bible states in Jeremiah 29: 11, “‘For I know the plans I have for you,’ declares the LORD, ‘plans to prosper you and not to harm you, plans to give you hope and a future.’”
I should do a better job of helping my clients to see this truth in their cases. Many of my clients, regardless of whether it is an IRS tax case or a family court case, the cases are drawn out over many months or years. This causes stress, etc. I admit that i need to do a better job of assuring my clients that the end is near, and that even though it is hard now and we have a lot of work to do, we will be able to work towards a solution as long as we “press on.”
I’m taking the day off - like almost every other American - to celebrate Independence Day. I wanted to wish all of my readers and web site visitors a happy 4th of July. Hopefully it will be a day of rest for a lot of people. Sometimes loving everything about our great country is hard when doing “battle” with the IRS on a daily basis. However, we do live in the greatest country on the planet and we are definitely lucky to be here.