FAQs

Q. Is there a way to find out if the IRS will accept my Offer in Compromise before I send the application fee and all of the paperwork?

A. The IRS has an online prequalification tool that you can fill out prior to sending in an Offer in Compromise. However, you will likely need to make adjustments before you submit your information in order to ensure that you receive an accurate preliminary proposal. The professionals at Highland Tax Group can assist you with checking your eligibility.

Q. What happens if I never hear back from the IRS about an Offer in Compromise?

A. If the IRS does not contact you within two years about the Offer in Compromise, the agency will automatically accept it.

Q. What should I do if the IRS rejects my Offer in Compromise?

A. You have the right to appeal your case or to resubmit another offer.

Q. What if I can’t afford to submit the application fee?

A. The IRS uses Low Income Certification guidelines to determine whether a person qualifies for poverty level. If you meet the criteria, you do not need to send in the $186 application fee, and you can wait to send in additional monies, including your initial payment and monthly installments, until you hear back from the IRS.

Q. What is the difference between an Offer in Compromise and Currently not Collectible?

A. An Offer in Compromise reduces the total amount of your tax liability, while Currently Not Collectible stops collection efforts – usually temporarily – on your account. If the IRS rejects your Offer in Compromise, the agency might agree to place your account on Currently Not Collectable status and stop all collection efforts. Your wages will no longer be garnished.

Q. Will the IRS withhold future tax refunds if my account is placed on Currently Not Collectible?

A. Probably, especially if you owe more than $10,000.

Q. If my account is placed under Currently Not Collectible status, will penalties and interest continue to be assessed?

A. Yes. Currently Not Collectible status serves as a last resort, and the IRS continues to charge you the related fees. In addition, the IRS computers will alert a field officer to investigate if you submit a tax return that shows a significant increase in your income or if the statute of limitations is about to expire.

Q. Does my wife have to be listed on financial form we turn into the IRS? I am curious because I (the husband) am responsible for the tax liability.

A. Unfortunately yes your spouse must be listed on the financial form. The reason behind the answer is fairly simple. In order to have a complete financial form along with the most accurate picture of what your finances look like we must have your wife’s information listed on the form. What I most frequently do is list the husband and wife’s income and then all expenses. Depending on the percentage of income each spouse brings to the table will depend on the amount of expenses we will allow the responsible party. Therefore, I obtain an accurate depiction of what the household is doing versus what the responsible party is contributing and spending on a percentage basis. Now I know what you are already thinking, is the non-liable spouse ever responsible for the tax accrued, and the answer is no.

Q. Do I need to give the IRS information about my bank accounts and assets?

A. This is a yes/no answer. If you owe the IRS more than $10,000 in 941 tax liability you can fully expect to have to provide information about your business. If the liability is more than $25,000 in 1120 income tax debt, the same thing applies. However, if you owe less than $50,000 in personal income tax debt or trust debt you may not have to provide information about your personal finances.

Q. When I make a payment, where do my payments get applied? Am I able to designate payments?

A If you or your business are making payments on an installment agreement you can expect your payments to be applied back to the oldest module first, to tax, penalties, and interest. If you are designating payments, you may make payments to be applied toward tax only, which will save you a significant amount of interest and penalties in the long run.

Q. Is the IRS able to levy my SSA (Social Security) income?

A. Yes, the IRS is able to levy any SSA income if you have an outstanding balance due.  Essentially any Federally sourced income is in the sights of the IRS due to the fact the funds are coming from the Federal Government. If you owe the Federal Government the IRS can and will levy (including tax refunds or Federal Military pay, or pension pay). As it relates to the SSA income, the IRS will levy 15%.

Q. Is the IRS able to levy my bank accounts?

A. Yes, the IRS is able to levy bank accounts, however, they have to send out specified notices in order to do so (approximately 5). The IRS must issue a Final Notice of Intent to Levy prior to sending out levies. Keep an eye on the mail and open all IRS notices at all times. Remember, when the IRS freezes your bank accounts, it is very difficult to get the money back.

Q. Is the IRS able to levy a pension/IRA/or Retirement Account?

A. Yes, the IRS is able to levy the above accounts, however, they like to stay away from forced levying of retirement accounts. First and foremost the IRS likes to collect the early withdrawal penalty of 10% (if you are below the required age of course).  The IRS also does not like to force people out of retirement monies. However, the IRS may ask and require someone to liquidate a portion or all of a retirement account under the appropriate circumstances

Q. If I obtain a settlement with the IRS, do I have to pay the entire amount upfront or in advance?

A. The answer is no.  There are a few different options regarding servicing and fully paying your settlement amount with the IRS.  The myth is you have to fully fund the offer upon acceptance. In reality you can pay it over a small term of 6 months or a more long term time frame of 24 months.  Not only that there are options to begin paying your offer before the IRS accepts it! Let us know if you have any further questions regarding the OIC process and we will be glad to help!

Q. How long does the Offer in Compromise process take from start to finish?

A. The answer is usually it depends. However, the standard Offer in Compromise can take up to a year to be finalized. Meaning from the time we are retained to work on your Offer in Compromise, to the time it is accepted, paid, and all liens are removed, it can take up to 1 year.

Q. How is an Offer in Compromise calculated? 

A. The offer process is not an easy process to navigate. To arrive at the offer amount we take a look at assets, equity in assets, and discretionary income to arrive at your offer figure. You must be current and compliant with all tax deposits, all tax forms and filings, and also be ready to provide a substantial amount of financial information. We will assist you in providing, walk you through the processes, and even offer financial consulting to get you into a better offer position.

Q. Do I need to pay my Offer in Compromise in full upon acceptance? 

A. No. There are two different types of plans concerning the offer in compromise process. The first option is a cash offer whereby you pay the offer amount (accepted) within 5 months of the acceptance date. The second options is to pay the offer within 24 months of the acceptance date.

Q. How do I know my accounts have been protected from levy action after I hire Highland Tax Group?

A. The first step we take is filing the Power of Attorney form and contacting the IRS immediately. Upon speaking with the IRS we confirm what you owe, if there are any missing returns, the status of your case, and confirm a collection hold. We keep the IRS off your back while we are working to resolve your case.

Q. What are the next steps? Do I need to send you anything after I have hire Highland Tax Group?

A. After we have completed the initial investigation we will send you an introductory package. Within the introductory package we will inform you of how much you owe and if you are missing any returns. If you are missing returns, we will ask you prepare and file all missing tax returns. Secondly, we will review your financial condition and ability to pay, utilizing either the form 433-A or 433-B. Once we have completed the financial review process, we will have a much clearer idea as to what you may qualify for as far as resolving your IRS liability.

Q. How much time do you think we will have to resolve my IRS accounts?

A. Generally speaking we attempt to secure a 30 day collection hold with the IRS. Meaning the IRS will not take any aggressive actions during the 30 day term. Within the 30 day term we will need to be sure you are taking corrective action to become current and compliant, file all missing returns, and work toward developing a financial strategy to resolve the balance dues.