Pending tax obligations can be really stressful, especially when you start receiving collection notices. And it isn’t fair to accept a tax bill you cannot afford when you can negotiate for something better.
If you meet all the requirements, you could convince the Massachusetts Department of Revenue (DOR) to enter into a bearable repayment agreement with you. Plymouth bankruptcy attorneys can explain what an Offer in Compromise is and guide you on how to go about it.
What Laws Govern the “Offer in Compromise” in Massachusetts?
The Massachusetts General Laws, Chapter 62C, s37A defines and states the requirements for an Offer in Compromise.” The legislation authorizes the DOR to accept a lesser amount than what is owed under the following conditions:
- If accepting the deal is best for the Commonwealth
- If the taxpayer had no fraudulent intentions
- If they seriously doubt if the amount owed can be recovered
Plymouth IRS tax settlement attorneys understand all the tax laws in Massachusetts and can break it down for you. You can consult if you are curious about what the law says regarding your tax liability situation, and you will get all the answers.
Who Qualifies to Apply for an Offer in Compromise?
The DOR only processes applications from taxpayers that meet the eligibility requirements. So, it’s essential to first find out if you are eligible to avoid wasting time exploring a relief option that you don’t qualify for. You could be ineligible if you:
- Have not received the final notice of assessment for all taxes owed to the state
- Have not paid all the estimates for the current year
- Have not paid the liabilities for the most recent year
- Have not filed all the tax reports and returns with the DOR
- Actively dispute the taxes owed
While being eligible doesn’t guarantee that your offer will be accepted, it is the first step towards possibly eliminating your tax liabilities. Speak to a bankruptcy attorney in Plymouth, MA, to find out if you are eligible to apply or not.
How Do I Apply for an Offer in Compromise in Massachusetts?
The process involves filing and submitting detailed financial forms, and attaching supporting documents. Notably, the office of the DOR solely uses the documentation provided to determine whether to grant you an Offer in Compromise or not.
It is, therefore, crucial to get the application right. Without prior experience, it is easy to fill the forms inappropriately or fail to attach some essential documents. Working with experienced Plymouth IRS tax settlement attorneys is advisable to avoid costly mistakes.
What Do I Require to Apply for an Offer in Compromise?
Understanding what is required helps taxpayers prepare better and compile everything on time. And once you have the forms and documents ready, it could be easier to begin the application process. Here is what you might need:
- Power of attorney and declaration of representative (Form M-2848), when an attorney represents you
- Supporting documents listed in the application checklist
- The electronic funds transfer authorization form if you opt to pay in installments
- Statement of financial condition and other information (Form M-433-OIC)
- Offer in Compromise application (Form M-656)
- The first payment; the first month’s payment for installment offer, or 20% of the lumpsum offer
Once you have all the above documents at hand, you can proceed with the application. A Massachusetts attorney can help you counter-check to ensure that nothing is left out. If you file right, you might have a higher acceptance chance.
What Does the DOR Consider in an Offer in Compromise?
Each Offer in Compromise application is surrounded by unique facts that guide the review. Some applications are accepted, and others are withdrawn or rejected. But every taxpayer’s hope is for their proposal to be granted. Here are some of the key considerations of the DOR:
- Whether the application has incomplete, misleading, or fraudulent information
- Your current and future expenses and income
- Whether your circumstances have the potential of changing
- The amount of equity in your assets
- Your ability to pay
- The best interest of the Commonwealth
Skilled Plymouth IRS tax settlement attorneys think deeply about these considerations and align their clients’ applications with them. The more convincing your situation is, the better the outcome might be.
What is the Minimum Offer Amount in Massachusetts?
If the offer is below the minimum possible amount, the IRS will likely reject it. The minimum acceptable offer is usually the sum of the net equity of your current assets and the projected amount to be collected from your future income.
Notably, the minimum payable amount is $5,000. Therefore, your Offer in Compromise should be $5,000 and above. A knowledgeable lawyer in Massachusetts can help you work out the right amount, to ensure that your Offer is accepted.
How Can I Wait to Get Feedback on My Offer?
The financial audit after an application can take 5-6 months. Some of the aspects the DOR will be examining during this period could include:
- Your liabilities, assets, and ability to pay
- Your previous tax payment history
The DOR might request you to submit additional financial information during this period. Failure to provide the information within the indicated timeline can result in the case being thrown out. And while you wait for the audit to be completed, here are things to keep in mind:
- You can withdraw the offer at any time before a determination
- You ought to pay installments as proposed as you wait
- The collection period could be extended
- You must file and pay your taxes
Lawyers Dedicated to Helping You Reclaim Financial Liberty
An incorrect assessment can leave you with tax liabilities you cannot afford to pay. Removing a significant percentage of the tax liability is possible if you make an acceptable offer with the DOR. Many offers are often denied for not adhering to the requirements.
You need a skilled lawyer that understands the rules of such offers to help you navigate. Speak to the legal experts at Benner & Weinkauf to learn everything you need to know about Offers in Compromise.