North Carolina

Offers in Compromise

According to the Internal Revenue Service (IRS), an offer in compromise provides individuals with the opportunity to settle their tax debt for an amount less than the total they owe. The IRS takes various factors into consideration when evaluating an offer, including the individual’s ability to pay, income, expenses, and asset equity.

An offer in compromise is approved by the IRS when the amount offered represents the maximum the agency can reasonably expect to collect within a specific timeframe. To be eligible for an offer in compromise, individuals must have filed all required tax returns, made necessary estimated payments, not be involved in an active bankruptcy proceeding, have a valid extension for the current year’s return, and have made tax deposits as an employer for the current and previous two quarters.

In cases where the IRS is unable to process an offer in compromise, the agency is obligated to return the application and offer application fee, applying any offer payment included to the outstanding balance. There are different payment options available, such as a lump sum cash payment of 20% of the total offer, followed by the remaining balance paid in five or fewer installments, or periodic payments in monthly installments.

Individuals who meet the low-income certification guidelines are exempt from submitting the application fee, initial payment, or monthly installments while the IRS reviews their offer. If an offer is rejected, individuals have the right to appeal within 30 days using the Request for Appeal of Offer in Compromise, Form 13711PDF. The IRS Independent Office of Appeals also provides additional assistance in such cases.

IRS Audit Defense

Chapter 96 of the North Carolina General Statutes grants the North Carolina Division of Employment Security Commission the authority to inspect employers’ records and mandates that employers allow their records to be reviewed. These audits are conducted to ensure compliance with unemployment tax laws.

The IRS is typically involved in the majority of audits, with potential reasons for audits including excessive business expense deductions, significant charitable donations, or claims for the Earned Income Tax Credit. Upon receiving an audit notice, it is common to also receive a notice regarding penalties.

It is crucial to promptly contact an attorney upon receiving an audit notice to seek legal assistance. IRS audits can generally cover a period of up to three years, and exceptions can be made for significant errors.

Anderson Bradshaw is experienced in assisting individuals in obtaining IRS tax debt relief.

Innocent Spouses

When a married couple files a joint tax return and continues to be married and live together in the same household, they may be eligible for innocent spouse relief. Innocent spouse relief is a provision that allows an individual to avoid paying additional taxes when their spouse understated the taxes owed on their joint tax return, and the individual had no knowledge of the error.

Underreporting taxes is the responsibility of only one spouse, and the attribution of the underreported tax must be specified in an audit report. The spouse seeking innocent spouse relief must demonstrate that they had no actual or constructive knowledge of the understatement and that it would be unfair to hold them liable for the tax debt.

To qualify for innocent spouse relief, the request must be made no later than two years after an IRS collection action. It’s important to note that obtaining innocent spouse relief can be a complex and challenging process, which is why seeking legal representation is highly recommended in these cases. A tax attorney can provide the necessary guidance and support throughout the innocent spouse relief application.