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| WARNING: These questions are provided to try and answer the most frequently asked questions about particular areas of law in the State of Texas and is not meant to be a substitute for competent legal advice. You are cautioned that these answers do not contain all the laws or all the answers regarding the subject and that the laws change on a regular basis. BE SURE TO CONSULT AN ATTORNEY BEFORE TAKING ACTION. |
Frequently asked questions about tax law If you are having problems with the IRS over delinquent income taxes see our pamphlet Federal Tax Disputes. The pamphlet is in Adobe® Acrobat ® format. You will need the Acrobat Reader to view and print the handbook. To download the reader, visit Adobe's web site.
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The IRS has filed a federal tax lien against me, is there anything that can be done to get some relief without paying the taxes owed in full? |
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Yes, depending upon the facts of each case the IRS is now authorized to grant some relief. The IRS may release federal tax liens if the taxpayer has entered into an installment agreement to satisfy the tax liability. This is true unless the installment agreement provides that the IRS does not have to release the lien. So it is important to be sure the negotiations with IRS end up with the taxpayer in the right place. For this reason it is sometimes best if the taxpayer does not negotiate his or her own installment agreements. Also, the Office of the National Taxpayer Advocate now has the authority to issue Taxpayer Assistance Orders to provide relief to taxpayers by, among other things, (i) ordering the release of a tax lien, (ii) ordering that it be done in a specific amount of time, (iii) order a release of levied property before the levy is complete, and (iv) require the IRS to take action on an amended return, letter request, or response to a notice. These orders can be issued when the taxpayer is about to suffer a "significant hardship," the definition of which is broad and open to interpretation. The IRS must consider numerous factors when determining whether there is a significant hardship. All situations are different, so it may be beneficial to look at this type of relief.
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I have heard about an Offer In Compromise to settle unpaid tax liability with Internal Revenue Service. How does this program work? |
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The Offer In Compromise (OIC) is a program where a taxpayer can pay a lesser amount in full satisfaction of an unpaid tax liability, including penalties, interest and additions to the tax. The IRS manual and policy statement states that "The Service will accept an Offer In Compromise when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential...." It is essential that a taxpayer proposing an OIC be prepared to offer a reasonable amount and be able to document their ability to pay no more than the amount offered; or if the claim is doubt as to liability, the reasons why the liability is not owed. Taxpayers must complete Form 433-A for individuals and Form 433-B for a business. These forms are signed under penalties of perjury and are
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