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IRS Collections

Offer in Compromise


Do you owe the Internal Revenue Services (IRS) more than you have the ability to pay? If so, you may qualify for an Offer in Compromise (OIC). The IRS allows taxpayers to repay less than what is owed if the taxpayer meets its stringent criteria in order to apply for the OIC. The taxpayer submits their OIC application and the IRS reviews your income, expenses, ability to pay, and assets. The IRS also takes into consideration the impact that paying the full amount the taxpayer owed would lead to any excessive financial hardship. Although many taxpayers have questions about the IRS actually reducing their tax debt, it is more economical for the IRS to settle out a tax debt with a taxpayer who cannot full pay than to continue spending time, money, and resources collecting the tax debt.

It is important to understand that an Offer in Compromise is not appropriate for every taxpayer that has delinquent taxes. The IRS makes the OIC process very difficult which is why LifeCycle Tax and Wealth Management’s experience can be beneficial to you, the taxpayer. Typically, the IRS does not accept proposals for less than you owe unless it reasonably feels the taxpayer cannot pay. The key here is reviewing all options and ensuring you meet the eligibility requirements for an OIC before going through the process. The taxpayer can’t be in any bankruptcy proceedings and must be up to date with all payment and filing requirements. Let one of our Enrolled Agents help you decide if an Offer in Compromise is right for your situation.

The Offer in Compromise process includes providing basic information about the taxpayer as well as information about your income, expenses, and assets. The IRS requires every form of income to be included in the information.

A few income items include:

  • W-2 wages
  • Business profits
  • Self-employed income
  • Rental income
  • Passive business income
  • Child support
  • Alimony

The expense section will include all expenses that are paid regularly. A few expense items include:

  • Mortgage/rent
  • Utilities
  • Alimony
  • Child support
  • Insurance
  • Childcare

The assets may include:

  • Fair Market Value of your primary residence
  • Retirement accounts
  • Resale value of vehicles and other personal belongings
  • Stocks/bonds/cryptocurrency
  • Bank account totals

In 2012, the Internal Revenue Services announced its Fresh Start Program. The Fresh Start Program included extensive changes like expanding the Offer in Compromise program, making it easier for taxpayers to qualify for an OIC.  This program provides taxpayers with a different installment structure that allows them to avoid tax liens and additional federal reviews. The Fresh Start Program revised the calculation for taxpayer’s future income. A few changes include:

  • Allows taxpayers to include student loan payments and payments on delinquent state and local tax debt as necessary expenses
  • Increased the allowable living expenses that a taxpayer could claim

The IRS changes to the Fresh Start Program allowed many taxpayers that previously did not qualify for an OIC to now qualify. The Fresh Start Program’s changes to expand eligibility will not necessarily remain this way. The negotiation of an Offer in Compromise is still not a simple process. It is important to have an educated representative to represent you through the Offer in Compromise process. The staff at LifeCycle Tax and Wealth Management is here to help you find the most strategic solution for your situation to settling your overdue tax bill.


Unfiled Tax Returns


Once a taxpayer has a missed tax return filing, many become worried about the potential Internal Revenue Service (IRS) issues and decide not to submit a return in future years. This increases the problems the taxpayer will have with the IRS as penalties and interest is added to the amount the IRS thinks you owe. The IRS will file a Substitute for Return (SFR) for all the missing tax years. The issue with the IRS filing an SFR is that it benefits the government, not you. The taxpayer will most likely miss out on credits, deductions, and any other tax breaks under current tax law.

You can alleviate much of the stress related to SFR by hiring LifeCycle Tax and Wealth Management. Our staff can help give you peace of mind throughout the process by helping you get in compliance with the government. LifeCycle’s staff has Enrolled Agents with years of experience understanding the IRS’s system and helping with solutions that are in the taxpayer’s best interest.

The best way to start the process of correcting IRS tax issues is by filing all returns from missing years. It is critical that you get current with the IRS. It is very likely that you will owe taxes, interest, and penalties after all missing returns are filed. LifeCycle Tax and Wealth Management will help you create a plan of action once all returns are current.


Back Taxes


Many taxpayers find themselves in the position of owing back taxes to the Internal Revenue Service (IRS) for several reasons. Some of the most common reasons include:

  • A taxpayer that is self-employed and fails to make estimated quarterly income tax payments or does not pay enough
  • Failing to file a tax return in the past
  • If the taxpayer is a small business owner, miscalculating payroll tax deposits of failing to make timely payments

The common reasons for owing back taxes happen due to honest mistakes or ignorance of the law in a many situation rather than a deliberate attempt to avoid paying the IRS. The IRS does not consider these valid reasons to fall behind in payment. LifeCycle Tax and Wealth Management can help YOU find the best way to handle your back taxes issue.

The Internal Revenue Service will inform taxpayers that they have a delinquent tax issue but will not always tell the taxpayer the back taxes owed. It is up to the taxpayer to contact the IRS to request a Record of Account. The taxpayer can get this form from a local IRS office or by contacting its toll-free telephone number and making a request. Prior to calling or visiting a local branch office, the taxpayer needs to complete Form 4506-T, Request for Transcript of Tax Return.

The most important thing the taxpayer can do if back taxes are owed to the IRS is to be proactive. The services of an Enrolled Agent at Lifecycle Tax and Wealth Management demonstrates to the IRS that the taxpayer has taken the initiative to resolve the back taxes issue. Our Enrolled Agents at LifeCycle can help the taxpayer avoid further IRS issues by negotiating with the IRS to reach a settlement.