There is nothing that says that you must have a tax lawyer working on your behalf when you are seeking an offer in compromise (OIC), but you have a better chance of obtaining more favorable results when you seek legal help. While you have rights as a taxpayer, the IRS does not always respect them. The agency may take a different approach when dealing with an individual versus when speaking with an experienced tax lawyer. When you hire a tax law attorney, you get advocacy from someone who both knows the law and how to talk to the IRS.
What Is an Offer in Compromise?
There are certain circumstances in which the IRS may be willing to accept less than the full amount of money that you owe in taxes. The IRS has its own goals, and one of them is the prompt and timely collection of as much money as it can receive from you in back taxes. Although some tax debts are not dischargeable in bankruptcy, others are, and the IRS recognizes that you may be unable to pay the full amount that you owe. If your tax debts are more than a certain age, you may seek to have them discharged.
You can make an offer in compromise to the IRS in an attempt to settle your tax debt for less than its full value. Essentially, this is a negotiation with the IRS to get them to accept a lower amount. If you meet the criteria for an OIC, the IRS may be willing to settle with you, and you can qualify for some form of tax relief. An OIC is not always as simple as making an offer to the IRS, and they will accept it. There are high stakes and many potential factors at work.
You Must Prove That You Meet the Criteria for an OIC
Before you can qualify for tax resolution under an OIC, you must show that you meet the criteria. You may not always be able to do this on your own because the IRS may claim that you are ineligible. You must fall into one of the following categories to be eligible for an OIC:
- Doubt as to collectibility: You are unable to pay the full amount of the tax debt within the required amount of time
- Doubt as to Liability – You can negotiate when you believe that the IRS has incorrectly assessed the amount of tax that you owe
- Effective tax administration – Being required to pay the full amount of taxes that you owe would subject you to an undue economic hardship, or can lead to an unfair result
It is not always certain that you meet the criteria that allow the IRS to negotiate with you in the first place. For example, you may not know enough about tax laws to challenge the liability or even understand that the IRS is asking you to pay more than you really owe. You may need the help of an experienced tax lawyer to show that you can meet the criteria before you can even talk about a compromise.
The documentation provided with the request for an OIC is crucial. Not only do you have to make full and accurate financial disclosures, but you must also prove that you meet the criteria.
How a Tax Lawyer Can Help You Negotiate with the IRS
The OIC process is a complex negotiation between you and the agency. Like any negotiation, you must lay the groundwork for your position through the arguments you make and the documentation that you provide. As such, you should not attempt to handle the IRS to your own.
When you hire a tax lawyer, they understand what may be a realistic position to take when negotiating with the IRS. They know that your initial offer in compromise may not be accepted and that the IRS may counter with its own amount. A tax lawyer first helps by devising a pragmatic strategy for the negotiation.
At the same time, a tax lawyer can also use any leverage that you may have to the fullest extent possible. They have a read on the current environment at the IRS and what the agency has been willing to accept from other taxpayers. This knowledge can counsel your negotiation strategy.
If you are making an OIC because there are doubts as to the amount of tax that you owe, hiring a tax lawyer sends a strong sign to the IRS that you are prepared to fight them in Tax Court if they take too hard a line in negotiations. You always have the ability to challenge the IRS if you do so within a certain amount of time after the tax has been assessed. Hiring a tax lawyer early in the process at least tells you whether you can come to an agreement with the IRS, or whether you need to move to fight in court.
You Should Not Deal with the IRS on Your Own
The IRS may not pay you as much respect as an individual trying to deal with them as they would an experienced tax attorney. When the IRS sees that you have a lawyer, they know that you are well aware of your legal rights as a taxpayer. They may be more willing to compromise on favorable terms when you approach them with the help of a tax lawyer.
Contact a New York Tax Lawyer Today
If you owe back taxes and need an advocate to work with the IRS on your behalf, speak to a New York tax lawyer at the Thorgood Law Firm. We work with clients nationwide on their tax issues. Schedule a free initial consultation with a New York tax attorney by messaging us online or by calling us today at (212) 490-0704. Do not try to deal with the IRS without help from an experienced tax lawyer.
