Zach Jones, Author at Edgewater CPA Group

Offer-in-Compromise vs. Bankruptcy – The Pros and Cons of Both

March 3, 2023 | Bookkeeping Services

Tax resolution can be a complex process. Taxpayers facing unmanageable tax debt have two primary options: bankruptcy or Offer-in-Compromise. Each option has its own set of pros and cons that must be considered carefully when making a decision. Bankruptcy is a legal process that helps taxpayers get rid of their debt including tax debt in under certain conditions. Taxpayers who file for bankruptcy receive an automatic stay and can discharge their tax debt quickly. However, filing for bankruptcy will remain on a person’s credit report for several years and may affect their ability to get future loans or lines of credit. An Offer-in-Compromise (OIC) is an agreement between the taxpayer and the IRS to settle a tax debt for less than the full amount owed. Taxpayers can submit an OIC if they can prove that they cannot pay the full amount of tax due. An OIC allows taxpayers to reduce their tax … Continued

An IRS Offer-in-Compromise – What Is It?

March 1, 2023 | CPA

An OIC is an agreement between a taxpayer and the IRS that allows for the settlement of outstanding tax liabilities for less than what is owed. This type of agreement can be a great option for taxpayers who are unable to pay their full tax debt, as it allows them to make one lump sum payment (or series of payments) in exchange for settling their debt. When submitting an OIC, taxpayers must provide proof of their financial situation and demonstrate that they cannot afford to pay the entire balance of tax owed. Taxpayers must prove to the IRS that the Reasonable Collection Potential (RCP) – the total amount of tax the IRS can reasonably expect to collect over the remaining time on the tax collection statute – is less than the tax owed. Taxpayers will need to provide documents to prove that their RCP is less than the tax owed and … Continued

IRS Installment Agreements – Which One Is Right For You?

February 22, 2023 | Indiana

An Installment Agreement is nothing more than an agreement with the IRS to pay the tax owed over an extended timeframe. Installment Agreements are an excellent way to stay compliant with the IRS if a taxpayer cannot pay their taxes when they are due. The IRS is not really interested in seizing a taxpayer’s assets. The IRS would much rather work with the taxpayer to pay his or her taxes over time. The IRS has four types of Installment Agremeents: Guaranteed Installment Agreement, Streamlined Installment Agreement, Financially Verified Installment Agreement, and a Partial Pay Installment Agreement. Which payment plan is best for a taxpayer depends on the facts and circumstances of the taxpayer’s case. There are different rules governing different payment plans. Knowing the rules of each plan can help a taxpayer pick the best plan for them. Guaranteed Installment AgreementThe first type of payment plan is an “Guaranteed Installment Agreement”. This … Continued

The 10-Year Collection Statute – Why is it so Important?

February 8, 2023 | Carmel

In tax resolution cases, there are many strategies that come into play when formulating a plan to resolve a tax debt. From allowable expenses, to equity in assets, and many other items, effectively solving a tax problem for a taxpayer has many angles. One angle is using the “Collection Statute Expiration Date” or CSED to a taxpayer’s advantage. The CSED is important because the amount of time remaining on the collection statute helps determine which solution the practitioner should select. What is the Collection Statute Expiration Date or CSED? Once the IRS assesses tax on a taxpayer, the IRS has, by statute, 10 years from the date of assessment to collect the tax. In most cases, after 10 years the tax debt becomes unenforceable and the IRS writes-off the debt on the taxpayer’s account. This makes the CSED a very useful tool in planning a tax resolution case for a client. If … Continued

What Does It Mean To Be “Currently-Not-Collectable”

February 1, 2023 | Business Tax Strategy

As with any tax resolution case, strategy plays an important part in resolving the tax debt. There are many factors that go into devising a plan to get a taxpayer compliant. Once such tool that can be very effective is for a taxpayer to be deemed “uncollectable” or “CNC (Currently Not Collectable – in IRS jargon)”. What does it mean to be deemed “uncollectable” by the IRS. Taxpayers can be placed in CNC status if their equity in assets plus their income is not sufficient to cover IRS allowable expenses. When a taxpayer is deemed uncollectable, the taxpayer’s tax accounts will be marked so that the IRS does not take any levy action against them. Being deemed “uncollectable” does not resolve the tax issue but it does benefit the taxpayer in a couple of ways: The 10-year collection statute on assessed taxes continues to runThe IRS will not take collection action against the … Continued

IRS Collections Process – What Is It?

January 25, 2023 | Accounting Services

In any IRS Collection case, there are certain notices the IRS sends out at each stage of the process. If a taxpayer doesn’t pay the tax in full when the tax return is filed, that taxpayer will receive a bill for the amount owed. This starts the collection process, and it will continue until the tax liability is satisfied or the government is not longer able to collect the tax debt. So what are the notices the IRS must send out? I’m glad you asked. CP501 NoticeThe first notice in the collection process is a CP501 Notice. This is the friendliest notice from the IRS. It will indicate the taxpayer has a balance due on one of his or her tax accounts. Once a taxpayer has filed the tax return, the taxpayer has 10 days to pay the tax. It not, then a CP501 Notice will automatically be generated and sent to … Continued

Tax Resolution – What is it?

January 18, 2023 | Accounting Services

It happens all the time. You come home from work and you walk to the mailbox and pull out a stack of envelopes. You look through shuffle through the many pieces of junk mail and then you stop dead in your tracks. It’s a letter from the dreaded Internal Revenue Service. Fear grips you. Your heart starts racing. Your hands get sweaty. You wonder if you should even open the letter and read it. Surely if I ignore it, it will go away – right? Wrong. Over 15 million taxpayers in the United States have tax issues with the IRS. While the prospect of having to deal with such a big and powerful government agency is daunting, it doesn’t have to be. Contrary to popular belief, the IRS is very willing to work with taxpayers to resolve tax debts in and amicable way. Whether it is an audit, back taxes owed, … Continued

Author Archives: Zach Jones