Government collection activity can hurt a company’s credit and ability to borrow funds needed to operate a business.

Understanding your legal rights and taking correct and immediate action may be the difference between a business that survives and a business that is forced to close its doors.

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When cash flow is strained, companies tend to get behind in paying taxes. A delinquent tax balance generally can result in the government taking aggressive action to levy a bank account, file liens, or potentially seize a business or asset.

If you owe taxes to IRS or the State of California, you have likely received collection letters and possible levies or liens because your company did not pay its taxes in full, the government assessed more taxes after an audit, or your company did not file a tax return (where the government filed a substituted return).

Government collection activity can hurt a company’s credit and ability to borrow funds needed to operate a business. Understanding your legal rights and taking correct and immediate action may be the difference between a business that survives and a business that is forced to close its doors. Milikowsky Tax Law can offer you the highly effective counsel that you require in order to succeed.

KEEPING YOU IN BUSINESS IS OUR BUSINESS

The offer in compromise (OIC) program provides individuals and businesses with an opportunity to resolve their tax debts with the IRS for less than the full amount owed. To be eligible for an OIC, however, the IRS has strict conditions. A taxpayer can reduce their balance if there is a financial hardship or there is a legal challenge the IRS’ ability to collect taxes. In other words, there is either a doubt as to “collectability” or a doubt as to the liability. Doubt as to liability exists where there is a genuine dispute as to the existence or amount of the correct tax debt under the law.

IRS scrutinizes a taxpayer’s finances, spending, income, and other legal issues before an offer is approved. Our San Diego business tax lawyers developed a sophisticated process to analyze your financials, income potential (ability to repay your tax debt), and legal issues.

You may have grounds for the IRS to grant your OIC request if there is:

• Doubt of liability: This may be met when there is a legitimate reason to dispute the existence or amount of the tax debt suggested by the IRS.
• Financial hardship: An OIC may be accepted when the amount of the tax liability is more than the taxpayer’s assets and income, thus exceeding their ability to pay back the taxes. If the tax liability creates an economic hardship or is deemed unfair and inequitable because of extenuating circumstances, an OIC may be accepted.

When reviewing an offer in compromise, the IRS will not consider anything less than the Reasonable Collection Potential (RCP) of a business or individual. This formula takes into account current assets as well as anticipated future income.

EFFECTIVE REPRESENTATION FOR COMPLEX TAX CONTROVERSIES

Preparing an offer in compromise for a business can be complicated when reviewing a company’s past, current, and future earning capacity and Fair Market Value. Assets can have unknown values and business cash flow projections can be unpredictable. The disclosure process requires extensive financial disclosure to IRS. IRS will also demand other documents to better understand a company’s financial health. However, understanding the rules and legal issues involved with an OIC can greatly improve your chances of a successful OIC acceptance.

If IRS denies your OIC, IRS may then start collection action, placing your business and assets at risk. Our team of skilled San Diego IRS attorneys can analyze your tax liability and determine if requesting an OIC is a viable option for your business.

At Milikowsky Tax Law, your economic survival is our first priority. Our dedicated team of San Diego offers in compromise lawyers has more than a decade of business, legal, and tax experience. We are committed to helping individuals save their business as they move to regain control over their financial affairs.