To many taxpayers the Internal Revenue Service (“IRS”) is notorious for being harsh and unyielding. As the Beatles once sang about tax collectors so infamously:
“Should five percent appear too small, Be thankful I don’t take it all, Cause I’m the taxman, yeah I’m the taxman…” – The Beatles, Taxman
The truth is the IRS is willing to help taxpayers with the burdens associated with late payments and penalties through its various programs.
One program in particular provides an option for taxpayers who cannot pay the full tax liability because doing so would create financial hardship. This program is called an “Offer in Compromise”, which allows the taxpayer to settle his/her tax debt for less than the full amount owed.
To qualify for an Offer in Compromise, the IRS considers a taxpayer’s unique set of facts and circumstances including:
• Ability to pay;
• Expenses; and
• Asset equity.
As the American economy continues to shed full time jobs, and more of us become self-employed, consultants or otherwise are getting by without the benefit of a traditional paycheck (subject to withholding), it’s becoming ever more likely that people will not make adequate provision over the course of the year to settle up with the IRS.
So if for any reason, you find yourself in the unfortunate position of falling behind on obligations owing to the Internal Revenue Service, do not succumb to despair or assume you have no recourse but penury. The IRS may be the ultimate government bureaucracy and it may be painfully slow moving but it is not tyrannical nor is it invariably unwilling to compromise.
At Brinen & Associates, we can help any taxpayer find an option to pursue tax relief that fits their personal or particular needs.
For more information:
A special thank you to Jonathan Goldsmith for assistance in preparing this blog post.