Finance Tax Time

Beware of advertisements that claim to settle tax debts for “pennies on the dollar”. Check the Offer In Compromise requirements to see if it is right for you.

1. If you are unable to pay a tax debt in full, if the taxpayer establishes to the satisfaction of the IRS that he either: has
no means of paying the tax, or does not actually owe the tax–and an installment agreement cannot be worked out–the IRS
strives to resolve the taxpayer’s tax debt.

2. Under certain circumstances, you may be able to take advantage of the offer in compromise (OIC), but there are
hurdles to overcome before the Internal Revenue Service accepts less than full payment. To date, taxpayers who have gone
through the Offer in Compromise program to settle their tax bill have saved millions of dollars.

3. An OIC delinquent tax settlement is an agreement taxes owed for less than the full amount of taxes due. It’s a complex
decision and a tax attorney is needed for his extensive expertise in planning, preparing, negotiating and even appealing
rejections.

4. IRS Code Sec. 7122 gives the IRS power authority to settle–compromise–federal tax liabilities. Exceptional circumstances
sometimes exist that allow the IRS to consider an OIC program for the taxpayer. For example, a taxpayer must demonstrate that
collection of the tax would create an economic hardship or would be unfair and inequitable.

5. Very few offers were accepted in the past, because the standards were almost impossible to meet before a tax debt was
legally compromised. Recent tax legislation has given new hope to taxpayers who were previously disqualified.

6. In the past the IRS really did not want to encourage OIC’s. Prior to 1992 the IRS has been reluctant to settle tax
liabilities, but with mounting uncollected taxes, the IRS has decided to go easy on the growing number of cases it sees.

7. Today, the OIC program is one of the best tax resolution tools available to taxpayers. The IRS will accept an OIC when
it looks unlikely that the taxes will be collected; but before that happens a good tax person must know and carefully navigate
virtually every key regulation involved.

8. After all taxpayer avenues are explored and different available payment options are reviewed, the IRS makes a
“business” decision: they want to collect a partial payment rather than nothing at all. The IRS is thinking, “Is there is
doubt that the taxpayer will ever pay the full amount of tax owed?”

9. An OIC amount “offered” by the IRS is the amount that they feel that they can reasonably expect to collect after reviewing–
and exhausting–the taxpayer’s ability to pay. The IRS weighs the doubt as to liability and doubt as to whether the tax
assessed is correct.

10. Beware of advertisements they claim to settle tax debts for “pennies on the dollar”, allowing taxpayers to settle their
taxes for less, or often much less than you owe (or what the government claims you owe). The IRS resolves less than one
percent of all balance due accounts through an OIC agreement.

Kirt Durst
Dedicated to offering news, articles, and instruction on tax. You have a definite choice in organizing your financial affairs. Visit http://www.aidtax.com for more information.

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As tax season draws irresistibly closer, the scam artists are polishing their latest techniques. This article should help you keep an eye out for these nasty individuals.

Tax Season - Time for Scams

In a particularly cheeky move, scam artists have started posing in on form or another as the IRS in an effort to get you to turn over social security numbers and such. Logically, this actually makes sense. Everyone is terrified by the IRS and dread be contacted by the Agency. Most of us would do anything to resolve any issue raised by an IRS Agent including sending them copies of credit card statements and providing crucial financial information over the phone. Put another way, this is the perfect scenario for a scam artists.

The goal of scam artists, of course, is to get private information they can use to open credit card accounts and so on. This is loosely known as phishing for the purpose of identity theft.

Phishing and identify theft can occur through practically any communication method. Here are some recent scams that were successful:

1. One group of scam artists started sending spam emails notifying taxpayers they were eligible for tax refunds. The scam worked because the emails were sent from IRS types of email accounts including the irs letters in the address. Taxpayers were then told to go to click through to a site where they could fill out a form and get their refund. Of course, the email address and web site were fakes. Nobody got a refund, but the scam artists received a bevy of social security numbers, credit card information and so on. In total, this scam occurred through 12 different web sites in 11 countries.

2. This one is a classic. Scam artists send bogus IRS letters and Form W-8BEN asking non-residents to provide personal information including bank account numbers, PINs, passport numbers and so on. Form W-8BEN is used by banks, not the IRS, to obtain information from non-residents who are opening bank accounts! Unfortunately, many non-residents fell for this scam and had their identities stolen.

There are a couple of guidelines you can use when dealing with IRS communications. First, the IRS never, ever sends email to taxpayers. NEVER! If you get an email communication, it is absolutely a scam. Delete it or send it to the IRS so they can take action.

If you receive mail communications from the IRS, call the agency to verify a letter was really sent to you. With phone call communications, get the persons name and call them back at the IRS. Both methods will stop scam artists in their tracks. Be skeptical of communications you receive from sources you are not expecting.

Finally, the IRS never asks a taxpayer for passwords or PIN numbers. If the agency desires to seize your bank account, they can just do it. They don’t need to take out $300 a day until your tax debt is collected!

Scam artists are highly creative people. If you have doubts about an communication of the IRS, pick up the phone and call the agency.

Richard A. Chapo is with BusinessTaxRecovery.com - providing information on tax and taxes. Visit us to read more tax articles and our new tax credits page.

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