Welcome to Berkshire Tax Resolution!
The Details:
Berkshire Tax Resolution defines an Offer in Compromise as an offer to settle your complete tax liability for an amount usually less than what you owe.
Generally, it should be your net worth, plus your disposable income for the next 5 years, clarifies Berkshire Tax Resolution. For many taxpayers this amount is minimal. By law, the IRS can’t reject your offer just because of the amount.
Berkshire Tax Resolution would like to point out that a compromise is effective for the entire assessed liability for taxes, penalties and interest for the years or periods covered by the offer. All questions of tax liability for the year(s) or period(s) covered by such offer in compromise are conclusively settled, explains Berkshire Tax Resolution. Neither the taxpayer nor the government can reopen a compromised case unless there was falsification of information or documents, concealment of assets, a mutual mistake of a material fact was made that would be sufficient to set aside or reform a contract, or the taxpayer fails to meet his filing requirements for the five years following the acceptance of the offer.
Berkshire Tax Resolution sheds light on the fact that an Offer in Compromise can be submitted based on the following 3 criteria:
2. Doubt as to collectability, and
3. Effective Tax Administration
Doubt as to Liability
This generally means there is a dispute as to the amount actually owed. It does not apply if a tax court has filed a final decision or judgment regarding a liability, explains Berkshire Tax Resolution. The IRS cannot reject a claim simply because they can’t find your file.
Details regarding the doubt of liability must be submitted. An alternative approach is to apply under both the basis of Doubt as to Liability as well as Doubt as to Collectability. Berkshire Tax Resolution would like to point out that if the latter is included, the requirements must be met for Doubt as to Collectability.
Doubt as to Collectability
Unless it is submitted as mentioned above, this means that the taxpayer believes in good faith they will never be able to pay the full amount of the taxes owed, clarifies Berkshire Tax Resolution. Doubt exists when the taxpayer’s assets and future income are less than the amount owed.
Full financial statements must be filed, and the IRS will make a determination based on the above items.
More Information - Berkshire Tax Resolution
Effective Tax Administration
Berkshire Tax Resolution would like to make it known that, if you are not contesting that you owe the tax or that you might be able to pay it, there is still another avenue open to you. It is called by the IRS “Effective Tax Administration.”
Berkshire Tax Resolution explains that there are 3 criteria for this Offer to work:
1. Collection of the full amount owed would cause the taxpayer economic hardship;
2. Compelling public policy or equity considerations identified by the taxpayer provides a sufficient basis for compromising the liability, and
3. Compromise of the liability will not undermine compliance by taxpayers with the tax laws
Economic Hardship
Economic hardship is defined by Berkshire Tax Resolution as the inability to pay reasonable basic living expenses as defined in Treasury Regulation §301.6343-1. In determining reasonable basic living expenses, Berkshire Tax Resolution explains that the IRS is to consider relevant information such as the taxpayer’s age, employment status and history, number of dependents, and other exceptional circumstances. Factors to support a finding of economic hardship include (not inclusive):
1. Taxpayer is incapable of earning a living because of a long term illness, medical condition, or disability, and it is reasonably foreseeable that taxpayer’s financial resources will be exhausted providing for care and support during the course of the condition;
2. Although taxpayer has certain monthly income, that income is exhausted each month in providing for the care of dependents with no other means of support; and
3. Although taxpayer has certain assets, the taxpayer is unable to borrow against the equity in those assets and liquidation of those assets to pay outstanding tax liabilities would render the taxpayer unable to meet basic living expenses.