You will have a more successful Tax Resolution practice if you use discretion when choosing which cases to take on.
1 min read
Many people avoid Tax Resolution because they believe the IRS never accepts offers. Don’t stress over the IRS.
According to the 2015 IRS Data Book, last year the IRS accepted 42% of Offers in Compromise, saving everyday Americans $204 million.
There are clear ways to identify which clients qualify for different Tax Resolution services. You will have a more successful Tax Resolution practice if you use discretion when choosing which cases to take on. Conduct an initial consultation to evaluate each case. Compare as much as you know about your client to these qualification lists to help you decide likelihoods of success and which clients to take on.
To qualify for an Offer in Compromise, your client must meet all of the following conditions:
Other factors that will be considered and increase the chance of the offer being accepted are:
To qualify for First Time Penalty Abatement your client must:
There are three kinds of relief from tax, interest, and penalties on a joint tax return a client filed with their spouse. The kinds are Innocent Spouse Relief, Separation of Liability, and Equitable Relief.
The different kinds of relief have different qualifications, but your client cannot apply for any Innocent Spouse Relief if the IRS already accepted an Offer in Compromise (for doubt as to liability) for their liability.
To qualify for Innocent Spouse Relief your client must meet ALL of the following conditions:
Your client is NOT eligible for Innocent Spouse Relief if they had knowledge of the understatement.
*erroneous items: any deductions, credits, or bases incorrectly stated on the return, and any income not reported on the return.
**understatement of tax: the difference between the total amount of tax that should have shown up on the client's return and the amount of tax that was actually shown on the return.
If your client qualifies for Separation of Liability they will divide the understatement of tax on their joint return with their spouse. To qualify for this type of relief, your client must meet the following qualifications:
Then, they must meet either of these requirements:
Your client may qualify for Equitable Relief if they do not qualify for Innocent Spouse Relief or Separation of Liability. Unlike those other two types of relief, a client can get Equitable Relief from either an understated tax or an unpaid tax.
To further qualify for Equitable Relief, your client must meet the following conditions (in most cases):
There are different requirements for qualifying for online payment agreements and installment agreements. Before applying for either, your client must file all required tax returns.
To qualify to apply for an online payment agreement, your client must:
If your client does not qualify for an online payment agreement, they can still pay installments. To review the application process, click here.
If your client is a small business owner who currently has employees, they can apply for an In-Business Trust Fund Express Installment Agreement. These agreements usually do not require a financial statement or verification for application. To qualify for this type of agreement your client must:
For more information on qualifications for Tax Resolution, visit irs.gov.
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