I.R.S. Tax Lien & Collection Solutions

     Newsletter For Businesses And Individuals

Eighth

NEW I.R.S. RULES DISCOURAGE  PAYROLL TAX OFFERS IN COMPROMISE FOR IN-BUSINESS TAXPAYERS.  BUT THERE IS A WAY TO OVERCOME THIS I.R.S. OBSTACLE

Although Congress told the I.R.S. to make offers in compromise more easy to obtain, the I.R.S. has made payroll tax offers in compromise harder to obtain. Despite this truth, I know of a way around the I.R.S.’s sneaky methods of discouragement.

A successful offer in compromise will allow a taxpayer that owes payroll taxes (as well as other types of taxes) to settle the full liability for pennies on the dollar.   The taxpayer can be an individual, a corporation, or other entity forms. Filing an offer in compromise will stop all enforced collection activity during processing.

    The Latest Sneaky I.R.S. Trick.

Recently, the I.R.S. rewrote its internal policy manual concerning offers in compromise.  Its manual, called The Internal Revenue Manual, is used by I.R.S. collection personnel who decide whether or not to recommend acceptance of an offer in compromise.    For the first time ever, the I.R.S. now requires that “in-business taxpayers attempting to compromise employment taxes must have demonstrated compliance by having filed and paid the preceding two

 

 

quarters.” To illustrate, let’s assume a taxpayer (a) owes $300,000 of delinquent payroll taxes for the 2nd, 3rd, and 4th quarter of 1999, (b) is still in business, and (c) wishes to file an offer in compromise on January 1, 2000, offering $10,000 to fully settle $300,000.   Given the new I.R.S. Internal Revenue Manual, this taxpayer’s offer in compromise will be returned and rejected as not currently processable.   Now, the I.R.S. says this taxpayer must file and fully pay its 1999 3rd and 4th quarter payroll taxes before  its January 1, 2000, offer in compromise will be processed.    How unfair!   The I.R.S. refuses to consider a good faith offer while at the same time conducts enforced collection activity.

 How To Get Around The New Two Preceding Quarter Rule.

Very recently, one of my clients seeking  to compromise about $500,000 of payroll tax liabilities for $20,000 had not paid its two prior quarter’s payroll taxes. Nonetheless, I got the I.R.S. to waive the two quarter rule and process the offer in compromise.   How?   By electing a procedure called a Collection Due Process Hearing.   Once the taxpayer elects to have a Collection Due Process Hearing, the I.R.S.’s appeals division takes over the case which has the authority to waive the two quarter rule.

  To find out how to elect a Collection Due Process Hearing, read the next article, visit my web site at www.ATaxLawyer.com and click “Stop IRS Collections,” or call my office.