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Posted on Feb 1, 2009 in Offer in Compromise | 0 comments

Adding 2008 Tax Liability to an Offer in Compromise

We’re at the time of year again where everyone is receiving their W-2’s and other tax information and you are ready to file those 2008 tax returns.  If you owe the IRS money this isn’t always an exciting time because you don’t have to worry about getting a refund because the IRS always keeps any refund you would be entitled to if you owe them money for past taxes.  But what if you are planning on filing an offer in compromise with the IRS to settle you back taxes and you are still going to owe the IRS money for 2008?

Well, you must file your 2008 tax return if you want that total included in your offer in compromise.  However, the IRS cannot collect that amount until they have assessed that tax against you so you should not file an offer in compromise until the 2008 tax has been assessed.

If you file your taxes between now and April 15, 2009 your tax return will generally be assessed on April 15.  However, if you file later than April 15 your taxes will not be assessed until sometime later.  It generally takes the IRS about 8 weeks (longer during this time of year) to get your taxes assessed against you so you can negotiate with them.

So, what do you do in the mean time while you are waiting on your taxes to be assessed?  You can start game planning for your offer in compromise.  Begin preparing your financial form, Form 433-A, which is a requirement for an offer in compromise.  You also must gather a lot of back up documentation to include with that form.  When you have a lot of lag time like this, it is a good time to get organized and get ready for the offer process as well as plan for 2009 so you won’t get back into the same tax trouble you have experienced in the past.

You will also want to make sure you pay special attention to any letters and correspondence you receive from the IRS to make sure you on not going to get your pay check or bank accounts levied.  That could be a total disaster, especially during some pressing economic times when every dime is so important.  If you have recently received some collection notices from the IRS, post a comment on this post and we can discuss it to see whether you should be worried about an immediate levy that may be coming from the IRS.