Tax Attorneys

• In many cases, the attorneys themselves have worked for the IRS. They know the system, the rules and what may constitute a reasonable plan that satisfies both the tax indebtedness and the IRS. When looking for a tax attorney, it is usually best to find one that has worked for the IRS in the past. Those who have tend to know the loopholes, the regimen and the people themselves that make the decisions. Don't discount the importance of a tax attorney having personal contact in the IRS because this can go a long way in determining the ultimate settlement.
  
  

Your First Option

• There are several options available to satisfy a tax obligation that hasn't been paid, and having the right tax attorney at the table may go a long way to make options more palatable to the government and to the settlement. One option is known as an offer of compromise, whereby you pay less than the full amount when the IRS recognizes the taxes owed cannot be collected in full, and the amount you agree upon can be collected over a "reasonable" period of time. The reasonable amount will be determined at the bargaining table.
  
  

Doubt of Collectability

• Under this scenario, there is no dispute about the amount of money owed to the government, but there is a big question whether the government can collect the full amount. Your financial circumstances may have changed in such a way that the IRS will recognize you can't meet the full debt obligation. You will need to show them--as arduous as this may be--thorough financial statements and supporting documentation to prove that you can't meet your tax debt.
  
  

Doubt of Liability

• The IRS may also accept an offer in compromise when doubt exists about the amount owed. Under this settlement, the dispute often involves the difference between what the IRS has determined is owed and the actual liability. This can easily happen when, for one example, if taxes weren't paid for several years. When taxes aren't paid, the IRS gets to make up the numbers based on past tax liabilities. It keep records for up to six years. If the IRS doesn't agree with the actual numbers and the ones they based on past returns, your financial inability to pay will not be considered. Again, it's good to have a good tax attorney to make your case.
  
  

Effective Tax Administration

• Under this compromise situation, there is no dispute that the taxes are owed. There's also no dispute about the fact that there are sufficient assets to meet the tax liability. Under this compromise situation, one must show that exceptional circumstances make it unfair or inequitable to require payment of the full amount. Those circumstances can include an inability to earn a living because of a long-term illness, medical condition or disability. The financial resources will be needed for dependents and for your personal care and support. There must be proof that monthly income is exhausted to provide for dependents who can't pay for themselves. Lastly, although there may be assets, if liquidating those assets (homes, cars or property) would make it impossible to meet living expenses, the IRS may be willing to accept this option. Once an amount has been agreed upon, there are three ways to pay. One is cash. Another option is to make payments over the next two years or a long-term deferred plan which requires staying current with the payment agreement and not incurring any new debt over the next 5 years until the payment is satisfied.
  
  

This is Why You Need a Tax Attorney

• Few people like the cost of hiring an attorney to navigate through the rules, regulations and subtleties of any of this compromise solutions. Fortunately, there are tax attorneys familiar with structuring these settlements. Unfortunately, there are additional costs for the attorney to lead you through the thicket. This is just a primer for most circumstances. There are other situations such as tax liens and tax abatement options. All circumstances may seem unique, but they have probably been encountered by the IRS before.