Tax Relief Disclosures & Circular 230

Pursuant to IRS Circular 230 regulations, any tax advice or educational information contained in this communication (including any links, calculators, or text) is not intended or written to be used, and cannot be used, for the purpose of avoiding tax-related penalties under the Internal Revenue Code.

Taxpayers facing tax debt should consult with an authorized Enrolled Agent (EA), Certified Public Accountant (CPA), or licensed Tax Attorney for tailored advice based on their complete financial records.

An Offer in Compromise is a statutory relief provision under Internal Revenue Code Section 7122. The IRS considers offers under three distinct legal grounds:

• Doubt as to Collectibility: Exists when the taxpayer’s assets and projected future income are less than the full tax liability (Reasonable Collection Potential).

• Doubt as to Liability: Exists when there is a genuine dispute over the legal existence or amount of the correct tax debt under the law.

• Effective Tax Administration (ETA): Exists when the tax debt is legally owed and could be collected, but doing so would create severe economic hardship or exceptional circumstances.

Under IRS policy, you cannot be considered for an Offer in Compromise, Installment Agreement, or Penalty Abatement unless you are in full filing compliance. This means all required federal tax returns for prior tax years must be filed.

Additionally, if you are self-employed or operate an active business, you must be current on all required quarterly estimated tax payments and federal payroll tax deposits for the current tax quarter.

The IRS charges a statutory non-refundable application fee of $205 for submitting Form 656 (Offer in Compromise). Additionally, taxpayers submitting a lump-sum cash offer must include an initial 20% non-refundable payment with their application.

Taxpayers whose gross monthly income falls below 250% of the federal poverty guidelines may qualify for the IRS Low-Income Certification waiver, which waives the application fee and initial payment requirements.

Submitting an Offer in Compromise generally suspends active IRS levy actions and wage garnishments while the offer is under formal investigation by an IRS Offer Examiner. However, the IRS may still file a Notice of Federal Tax Lien (NFTL) to protect the government's interest.

Federal tax liens are released only after the agreed settlement amount is paid in full and the terms of Form 656 are satisfied.