Frequently Asked Questions
I have not filed tax returns for a number of years. Will I be prosecuted upon filing of these returns?
- No, if there is a liability as a result of the filing the returns the case will be referred to IRS Collections for civil remedies. The case would only be referred for criminal investigation if the returns were prepared fraudulently.
I have a delinquent tax liability and wish to get married. Will my new spouse become responsible for my old tax debt when we marry?
- No. The only individuals responsible for the “old” tax are those personally assessed. However, if you commingle funds with your new spouse (i.e. joint bank account) the IRS may attach the joint account. Your new spouse would then be required to prove the portion of the funds attached which are attributable to him/her.
If my Offer in Compromise is accepted will I begin to receive my income tax refunds in subsequent years?
- You will not receive any income tax refund for the return filed in the year your Offer in Compromise is accepted. The IRS is permitted to keep this refund. The refunds for the years after the “year of acceptance” will be sent to you.
What are the future requirements for my Offer in Compromise to remain in place?
- You must file all returns when due and pay all liabilities when due for five (5) years after your Offer in Compromise is accepted. Failure to comply with these requirements will result in acceptance of your Offer in Compromise being revoked and the amount originally owed being reassessed against you.
I owe a significant amount of taxes. Will the IRS seize and sell my personal residence?
- Usually, the answer is no. In “blatant” cases of failing to pay the tax the IRS may sell a personal residence. However, in our experience, this is a rare occurrence.
If my Offer in Compromise is accepted, how long will I have to pay the amount offered?
- The process usually takes a minimum of 6 months. Once the Offer in Compromise is accepted you will receive a formal acceptance letter. Once this letter is received you will have five (5) months to make payment. If additional time is needed, an extension of up to 120 days is available. If the liability owed exceeds $50,000.00, approval of the Offer in Compromise must be reviewed by IRS District Counsel before the formal acceptance letter is sent. This process usually results in an additional 60-90 days to pay make the offer payment.
Can I pay my Offer in Compromise and, if accepted, make monthly payments on the amount offered?
- The IRS does have a procedure where monthly payments can be made. However, it has been our experience that taxpayers have difficulty abiding by the terms of the monthly agreement. If possible, it is a far better arrangement to pay the offered amount in a lump sum. It has also been our experience that the IRS, is more likely to accept a lump sum Offer in Compromise than one in which monthly payments are made over an extended period of time.
Is there a statute of limitations for the collection of taxes that I owe?
- Yes. The IRS has a ten (10) year collection statute. In essence, the statute provides that you will not be required to pay taxes over ten (10) years old from the date of assessment.
Can I discharge my tax obligations by filing bankruptcy?
- We refer clients with bankruptcy issues to a bankruptcy attorney. As a general rule, you can discharge income taxes which are more than three (3) years old. Form 941 taxes are non-dischargeable as the taxes owed are withholdings from employees’ wages.
I have a levy against my wages. Will the IRS release the levy or am I required to pay the tax liability in full before the levy will be released?
- You will not be required to pay the tax in full before the levy will released. Typically, the IRS will release the levy if an installment agreement is reached for monthly payments on the tax owed. Before the IRS will enter into an installment agreement with you, all your tax returns MUST be filed.
If you have any additional questions please call our office.
Contact the Dayton office at (937) 439-5708 or our Columbus office at (614) 228-2680 or by email.
