The Internal Revenue Service along with a host of state taxing agencies namely the California Franchise Tax Board, Employment Development Department, and State Board of Equalization allow taxpayers to settle delinquent tax liabilities (based on ability to pay). Settlements are generally much less than the original debt. In some instances, offers may reflect a small fraction of the original liability. Acceptable offers allow for a fresh start, permanently eliminate the past due tax, and may permit a lump sum and or monthly installment payment settlement. All federal tax settlements require clients to remain current on their income tax payments for five years following the year of compromise. Breaching this requirement allows the IRS to revoke the compromise, assess penalties, accrued interest, and the original compromised liability.
Offer-in-compromise programs mitigate virtually any personal, estate or business tax. This includes personal and corporate income taxes, estate taxes, payroll taxes, and penalties/interest assessments. Oftentimes the penalties and interest can be greater than the original tax liability. The offer process may take as little as three months or as much as three years, depending on the taxing agency. When evaluating offers for acceptance or rejection, each agency relies on its own set of local or national standards for measuring necessary living expenses and assets.
The Tax Practice has successfully represented clients in compromising thousands of dollars in delinquent taxes and penalties averaging a 75% savings returned to clients.