IRS Tax Settlement - Federal Lawyer

IRS Tax Settlement

Find Out What You Need to Know About Seeking an IRS Tax Settlement

The Internal Revenue Service (IRS) has adopted settlement procedures for taxpayers that cannot afford to pay the full amount they owe. However, the IRS does not take taxpayers’ attempts to settle their tax debt lightly—in large part due to the cottage industry that has sprung up around offering to help taxpayers settle their debt for “pennies on the dollar.” In reality, negotiating an IRS tax settlement is not an easy process; and, to convince the IRS to settle, taxpayers must be prepared to clearly demonstrate both their eligibility and their inability to pay.

At Oberheiden P.C., we have significant experience representing individual and corporate taxpayers in IRS tax settlement negotiations. We can help you determine whether it makes sense to pursue a settlement; and, if so, our attorneys can make all necessary filings and negotiate with the IRS on your behalf. We can also help you consider settlement alternatives—such as filing an IRS audit appeal, submitting a voluntary disclosure, or taking advantage of the IRS’s streamlined filing compliance procedures.

What You Need to Know Before Contacting the IRS Regarding Settlement

As with all federal tax matters, seeking to negotiate a settlement with the IRS requires a strategic approach. Timing is critical; and, in particular, taxpayers need to be extremely careful when they are aware that they have underpaid but have not yet faced scrutiny from the IRS. In this scenario, pursuing a settlement (most likely through an offer in compromise (OIC)) may or may not be the best option.

Submitting an OIC or approaching the IRS about settlement through other means does not guarantee that the IRS will enter into settlement negotiations. If a taxpayer voluntarily shares information about non-compliance, the IRS may choose to conduct a tax audit or launch a tax fraud investigation instead. This can lead to additional liability, and it can even lead to criminal charges in some cases.

When you engage Oberheiden P.C., our attorneys will help you make an informed decision about how to move forward. If pursuing a settlement makes sense, our attorneys will negotiate for a favorable settlement on your behalf. If settling is not your best option, our attorneys will either fight to eliminate your (or your company’s) tax liability, or else help you pursue another option (i.e., voluntary disclosure) focused on protecting you to the greatest extent possible.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Two Options for Negotiating an IRS Tax Settlement

When negotiating an IRS tax settlement makes sense, taxpayers have two primary options for pursuing a negotiated settlement. These options are: (i) submitting an offer in compromise, and (ii) negotiating an IRS tax settlement through the appeals process.

1. Submitting an Offer in Compromise (OIC)

The offer in compromise program is the IRS’s primary method for settling taxpayers’ tax debt. For taxpayers that qualify to submit an OIC (and for whom submitting an OIC does not present unnecessary risks), leveraging the benefits of the OIC program can be an effective means of substantially reducing the amount they owe.

The option to submit an offer in compromise is not available to all taxpayers. For the IRS to consider settling a taxpayer’s tax debt through an OIC, the taxpayer must be able to demonstrate at least one of the following:

  • Doubt as to Liability – This requires clear evidence of a genuine dispute as to the amount the taxpayer owes.
  • Doubt as to Collectability – This requires evidence that the taxpayer’s assets and income are insufficient to satisfy the taxpayer’s tax debt.
  • Effective Tax Administration – This requires evidence that requiring payment in full would either “create an economic hardship or would be unfair and inequitable because of exceptional circumstances.”

Submitting an offer in compromise requires strategic planning and thorough documentation. Generally, the more a taxpayer owes, the more difficult it will be to achieve a favorable settlement through an OIC. However, substantial tax debts present substantial opportunities for negotiation as well. We represent taxpayers seeking offers in compromise in a wide range of circumstances; and, if you have questions about submitting an OIC, we can help you decide how to move forward.

2. Negotiating an IRS Tax Settlement Through the Appeals Process

Another option for individual and corporate taxpayers that have grounds to dispute their federal tax liability is to seek an IRS tax settlement through the appeals process. The IRS’s Independent Office of Appeals hears challenges to revenue agents’ and auditors’ determinations of liability, and it “seeks to resolve disputes between taxpayers and the IRS without the need for litigation” when possible.

While individual and corporate taxpayers can use the appeals process to dispute their tax debt, they can also use the process to settle with the IRS. In fact, the majority of appeals filed with the Independent Office of Appeals settle. Here, too, our attorneys can help you weigh your options; and, if you have grounds to file an appeal, we can leverage the appeals process to pursue a settlement—if not eliminate your (or your company’s) tax debt entirely.

Federal Tax Lawyers Experienced in Helping Clients Negotiate IRS Tax Settlements

At Oberheiden P.C., we rely on significant experience to help our clients favorably resolve complex and high-stakes tax controversies. This includes negotiating IRS tax settlements when warranted. Our experience includes not only representing taxpayers in IRS audits, appeals, and settlement negotiations, but also prior experience representing the IRS as government tax attorneys and Special Agents with IRS Criminal Investigation (IRS CI).

We help our clients make informed and strategic decisions about pursuing IRS tax settlements; and, when it is in our clients’ best interests to settle, we negotiate on behalf of our clients using the specific details of their individual circumstances to maximize their tax savings. As our client, we will work closely with you throughout the process, helping you make informed decisions about when to settle and when to consider alternatives such as challenging the IRS’s determination of tax liability in the U.S. Tax Court.

FAQs: Pursuing an IRS Tax Settlement

When does it make sense to seek an IRS tax settlement?

Generally, it makes sense to seek an IRS tax settlement when you cannot afford to pay what you owe or there is a legitimate question as to your (or your company’s) federal tax liability. With that said, if you have grounds to dispute the IRS’s determination of tax liability, then fighting the IRS’s determination through an appeal or litigation in the U.S. Tax Court may be the better option. Conversely, if you are dealing with an underpayment that has not yet come to the IRS’s attention, then you will need to carefully weigh the risks of voluntarily disclosing the underpayment to the IRS.

How long does an IRS tax settlement take?

The process of negotiating an IRS tax settlement can take anywhere from several weeks to several months. In cases involving substantial tax liability or complicated tax issues, the process can potentially take a year or longer. When seeking an IRS tax settlement, it is important to proactively address the taxpayer’s outstanding liability with the IRS to ensure that any delays in payment during the settlement process do not result in accrual of unnecessary interest and penalties.

What happens if the IRS rejects a taxpayer’s attempt to settle?

If the IRS rejects a taxpayer’s attempt to settle, the consequences depend on the circumstances involved. If the IRS is already aware of the taxpayer’s outstanding tax liability, the next step may be to pursue an appeal with the IRS’s Independent Office of Appeals or pursue litigation in the U.S. Tax Court. However, if a taxpayer voluntarily discloses an underpayment through an offer in compromise or other settlement efforts, the IRS’s rejection of these efforts could potentially lead to an audit or criminal tax fraud investigation.

Do I need a lawyer to seek an IRS tax settlement?

Given the challenges and risks involved with pursuing an IRS tax settlement, individual and corporate taxpayers will both benefit from engaging experienced counsel to represent them during the process. At Oberheiden P.C., we advise and represent our clients in all aspects of the settlement process, from evaluating their options to negotiating on their behalf.

What are my options if I don’t qualify for an offer in compromise?

If you don’t qualify for an offer in compromise, your options depend in part on why you don’t qualify. If you can clearly afford to pay what you owe, then the IRS may not be willing to consider a settlement through any of its dispute resolution procedures. However, the appeals process offers additional opportunities to reduce (or eliminate) taxpayers’ liability; and, if you have grounds to dispute your tax liability, going to the U.S. Tax Court may be an option as well.


Schedule a Complimentary Initial Consultation at Oberheiden P.C.

If you need to know more about seeking an IRS tax settlement, we encourage you to contact us for a complimentary initial consultation. To discuss your options with a senior federal tax attorney at Oberheiden P.C. in confidence, please call 888-680-1745 or inquire online today.

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