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Tax Law
Stopping Tax Collections and Resolving Tax Claims and Disputes
We have helped many clients, both individuals and businesses, settle outstanding tax claims with the Internal Revenue Service or the Oregon Department of Revenue for substantially less than what was owed.
If you cannot pay your tax debts in full or if you dispute what is owed, you may be able to resolve these issues with our help through the tax settlement programs available with both of these tax agencies. The IRS Offer in Compromise program and the Oregon Department of Revenue Settlement Offer program both may allow you to settle your tax debts for what you can afford to pay, even if it is less than the amount you owe.
In other words, if you are unable to pay your entire tax bill, we may be able to negotiate settlements for you with the Internal Revenue Service or the Oregon Department of Revenue. In certain circumstances it is also possible to settle on the basis that you dispute that you owe the tax claim.
In both programs, it is important to remember that both tax agencies have the power to accept or reject any settlement offer. We cannot force the Internal Revenue Service or the Oregon Department of Revenue to accept a settlement from you. We try to show the tax collectors that it is in their best interest to settle with you for a reduced amount. We do this by proving that your settlement offer is fair and reasonable because it represents at least as much as the government could reasonably expect to collect from you over the time it has left to try to do so.
These programs make it easier for you to apply for help when facing dire financial circumstances because they allow the tax agencies to be a little more flexible when considering your offers to settle your tax bills.
To qualify, your settlement offer must reflect the maximum amount you can pay over and above your basic living expenses. The amount of an offer should equal or exceed your equity in assets, ability to make installment payments from future income, amounts the IRS or ODOR can collect from third parties on your behalf and funds that are available to you but not otherwise subject to IRS or ODOR collection actions. For these purposes, some assets may be valued at less than full value because of the costs of sale and other factors.
These programs are designed only for taxpayers caught up in very severe financial circumstances. They are not programs for everyone with tax problems. Many people will have to negotiate a payment plan because they will not qualify for settlement offers. It is not designed to be a program for everyone with financial problems. However, if you are having problems paying your tax bills, there is a good chance that we can work with the IRS and the ODOR to make resolution of your tax problems bearable.
Neither the IRS or ODOR will consider a settlement offer if you are involved in an open bankruptcy or if you have not filed all of your tax returns. Preparation of all of the missing tax returns is usually a necessary first step. We do not do tax return preparation and so you will have to hire a tax consultant or CPA to help you get the necessary information and complete any unfiled returns. We can recommend several excellent tax preparers or accountants so ask for a referral if you need help preparing missing tax returns for earlier years.
If you cannot afford to pay your past due tax debts we can help by presenting your settlement proposals and the supporting information to the IRS or ODOR. If the facts in your case justify it, we can arrange settlements with the IRS or ODOR to reduce or eliminate tax debts. If our analysis shows that you probably can not settle with the IRS or ODOR because you have substantial disposable income or significant assets, we can help by trying to negotiate reasonable payments that you can afford to make.
- How much does it cost to have us start working on your case with the IRS or the ODOR and what does it usually cost for the entire process of proposing a settlement offer?
- How does the procedure work?
- How long does it take?
- We don't have enough income to pay all of our living expenses but we keep receiving collection notices from the IRS or ODOR. They are threatening to take our paychecks and our home. Will filing a settlement offer stop all collection actions against us?
- Is it possible to discharge taxes in bankruptcy?
- We have some equity in our home and retirement plans. Will the IRS consider these in analyzing the availability of a settlement offer?
- If the IRS or the ODOR has filed a tax lien against me and my property, will it prevent me from buying or selling my property
Answers:
- How much does it cost to have us start working on your case with the IRS or the ODOR and what does it usually cost for the entire process of proposing a settlement offer?
We do not offer a free consultation on tax cases because they often involve complicated issues. Instead, we charge a flat fee for the initial consultation of $250.00 per hour for a 30-60 minute office visit or telephone conference. Payment in advance is required. It is usually possible to make a preliminary evaluation of your prospects for a tax settlement in the initial consultation. However, a complete analysis based on your financial records is required before a final determination can be made.
Our usual retainer for a typical case is $1,500.00. The legal fees are $250.00 per hour for attorney time and $100.00 per hour for paralegal time. We will ask for a larger retainer in more complicated cases. Time records are kept on the basis of one-tenth of an hour or six minute intervals. The retainer is kept in our Clients' Trust Account each month until you are billed for legal services. We pay ourselves from the retainer at the time that the bill is sent to you. You must replenish the retainer by the 15th day of the month to maintain a minimum balance of $1,500.00 in our Clients' Trust Account. We must withdraw from representation before the taxing agencies if you do not.
The usual total legal fee for handling a Settlement Offer to the ODOR or Offer in Compromise to the IRS is approximately $2,500.00 to $3,500.00. For offers to settle with both agencies, the usual fee is approximately $1,500.00 to $2,500.00. The exact amount of the actual fee is determined by the exact amount of time spent that we spend working on your case. back to questions
- How does the procedure work?
We help you complete questionnaires regarding your financial situation and work with you to obtain supporting records. We evaluate your ability to make payments and propose the best settlement offer possible based on your circumstances. We then negotiate with the IRS or ODOR to reach a favorable settlement agreement. back to questions
- How long does it take?
It usually takes six to nine months to receive a final answer on a settlement proposal. Payment arrangements usually last from two to ten years. It is not uncommon for the tax agencies to want additional records or other documentation before considering or accepting a settlement proposal. Such requests for more information delay the process and increase the necessary legal fees. back to questions
- We don't have enough income to pay all of our living expenses but we keep receiving collection notices from the IRS or ODOR. They are threatening to take our paychecks and our home. Will filing a settlement offer stop all collection actions against us?
A settlement stops collection efforts only after it has been accepted. If the taxing agencies have already started the process of taking earnings or other assets, only a bankruptcy filing can stop the collection actions that are in progress. However, usually the IRS and ODOR will not start collection actions, if they were not collecting already, while they are considering a settlement proposal. Frequently, individuals with insufficient income to pay living expenses are placed in an uncollectible status once the questionnaire is completed. back to questions
- Is it possible to discharge taxes in bankruptcy?
A bankruptcy can discharge certain income taxes. In general, income taxes may be discharged in bankruptcy if they were first due more than 3 years before the bankruptcy is filed, but only if the tax returns were actually filed more than 2 years before the bankruptcy is started. There are some exceptions. It is clear that in most cases, our legal evaluation of your prospects for a tax settlement must include consideration of your bankruptcy options. The tax agencies do not consider payments on unsecured debts such as credit cards and medical bills as part of your reasonable living expenses. As a result, it sometimes is necessary to file a bankruptcy to get rid of these unsecured debts so that you can afford to make the payments that the tax authorities will insist upon as part of a settlement. back to questions
- We have some equity in our home and retirement plans. Will the IRS consider these in analyzing the availability of a settlement offer?
The IRS will consider equity in your home and your retirement accounts as part of your overall financial picture. If you clearly have enough equity in your home to pay the taxes, you would be better off to try to borrow against it to pay the taxes than try to do a settlement offer. However, if it is not possible for you to refinance or if the equity in your home is less than what it would cost in real estate fees to recover it, you may still be able to get an IRS or ODOR tax settlement despite having some equity. If you cannot settle with the tax agency on a reduced payoff, we still can negotiate a payment plan. The IRS and the ODOR recognize that it may not be possible to pay them everything you owe at one time. Usually, we are able to negotiate a reasonable payment plan that you can live with, even though you still have to pay all of the taxes and interest that you owe. back to questions
- If the IRS or the ODOR has filed a tax lien against me and my property, will it prevent me from buying or selling my property?
It is possible, in many cases, to get the IRS or the ODOR to agree to release property from a tax lien or substitute other collateral for a tax lien. The tax agencies might agree to subordinate their lien to a new loan. All of these things are possible if the purpose is to get money to pay toward the taxes. The taxing authorities will often release a lien against property in order to allow it to be sold to get money to pay toward the tax debt. back to questions
This web page is designed to help you obtain information about stopping tax collections and resolving tax claims and disputes and how we handle this area of law at Behrends, Swingdoff, Haines and Critchlow. It is not intended to give you legal advice for your specific situation. Please call or write if you would like to request a packet of information, schedule an appointment or retain us or if you just want to talk to a legal professional about your questions.
You can reach us during regular business hours at (541) 344-7472 or 1-800-391-7472. You can also leave a message on our answering machine on either of these phone numbers with your name, phone number and/or address. Our fax number is (541) 344-6466. Our address is P.O. Box 10552, Eugene, OR 97440. If it is more convenient, email us at info@oregon-attorneys.com.
We encourage you to call with your questions so that you can get answers right away.
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