Information Regarding Offers In Compromise

Boston area tax lawyer Theodore L. Craft strives to achieve success in terms of obtaining IRS concessions with offers presented. However, no lawyer can offer a guarantee of success since offers in compromise are at the discretion of the Internal Revenue Service (IRS). However, Mr. Craft's more than 40 years of tax law experience lends credibility to a client's case and comfort to the client.

Contact tax lawyer Theodore L. Craft to qualify your concerns.

What Is An Offer In Compromise?

An offer in compromise is something attorney Craft undertakes for everyone he represents on a regular basis where some probability of success can be measured. Predictions do not hold in this area. First, financial condition must be studied on a pervasive scale. This is because of the "reach" of the federal tax lien. (See discussion under tax collections). Insofar as age, health, remaining periods of collection statutes, whether an offer might be acceptable given IRS limitations, transferred assets, shifting equity, high income, and dozens of other factors enter into the evaluation of an offer once made to compromise a tax liability. Evaluation of acceptability probability for an offer is a highly skilled study.

Internal Revenue Code Guidelines Regarding Offers In Compromise

The Internal Revenue Code ("IRC") prescribes guidelines for officers and employees of the Internal Revenue Service to determine whether an offer in compromise is adequate and should be accepted to resolve a dispute. In the IRC guidelines, it is made clear that any civil or criminal case arising in the IRS and prior to reference to the Department of Justice for prosecution of a tax crime may be compromised.

There are published schedules of national and local allowances designed to provide that taxpayers entering into a compromise have an adequate means to provide for basic living expenses. The IRS is not generous, however. The guidelines are very strict and the information provided on financial condition forms is a "moving target" for the IRS to scrutinize, criticize and, most often, limit (by way of offsets to collectible income and equity in assets).

Putting A Stay On A Federal Tax Lien Or Levy

An offer in compromise is often filed to stay a federal tax lien or levy. However, it is clear that an offer in compromise may not be considered if it is based solely on a purpose to delay collection. An offer in compromise once accepted by IRS, is an agreement to which the taxpayer is bound for 5 years. In other words, full compliance with the tax laws must be realized by the taxpayer for 5 years after an offer in compromise is accepted.

Pre-conditions to acceptance of an offer in compromise. Many pre-conditions to acceptance of an offer into the program exist that are too numerous to mention. Suffice to say that because a compromise may involve:

  1. The payment of less tax than is owed

  2. The payment of less interest (on tax forgiven)

  3. An abatement of penalties

As interest does not run, on the compromised liability, the offer is far superior to an installment agreement.

Installment agreements. An installment agreement is simply an amortization over time of a tax liability with a fixed rate of interest similar to a mortgage. An offer in compromise is often thought of an administrative bankruptcy.

A Cost-Benefit Evaluation

An offer in compromise case is highly factual and time-intensive, so a cost-benefit evaluation must be made.

We charge against a retainer from the point at which a case is accepted for representation. This is often because a case is already stressed by the enforced collection efforts. Once a cost-benefit analysis has been made we decide whether we can move forward with an offer. Our decision is based upon observable prospects for success in an offer "range" which those we represent can afford to pay, even if third-party financing sources are involved. That individual must often be willing to proceed through to an appellate level on the offer, if necessary, to obtain relief. Compromises are considerably more rare currently than in previous years.

Contact An Experienced Tax Lawyer

You need experienced counsel when dealing with investigations by a grand jury. To obtain the help of a tax attorney with more than 40 years of experience, contact the office of Theodore L. Craft, Esq., LLM, today at 888-TAX-RISK to schedule a consultation. Located in Melrose, we provide representation to clients across the Boston area.