Tax Relief, Negotiation Reduction Elimination Forgiveness Tax Debt Settlement Solutions
The tax debt settlement offer in Compromise (or OIC) Tax Debt Negotiation program, in the United States, is an Internal Revenue Service (IRS) program which allows qualified individuals with an unpaid tax debt to negotiate a settled amount that is less than the total owed to clear the debt.
The objective of the OIC program is to accept a compromise when acceptance is in the best interests of both the taxpayer and the government and promotes voluntary compliance with all future payment and filing requirements.
Taxpayers in the United States may have tax consequences when debt is cancelled. This is commonly known as COD (Cancellation of Debt) Income. According to the Internal Revenue Code, the discharge of indebtedness must be included in a taxpayer's gross income.
There are exceptions to this rule, however, so a careful examination of one's COD income is important to determine any potential tax consequences.
The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007. Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.
A taxpayer is insolvent when their total liabilities exceed the fair market value of assets. For example, if a taxpayer has $100,000 in liabilities, but only $50,000 in assets, they are considered insolvent under the Internal Revenue Code.
Therefore, a cancellation of a $20,000 debt will not need to be reported as gross income. However, if a debt of $60,000 was cancelled, the taxpayer will have $10,000 in gross income because their total liabilities no longer exceed their total assets (cancelling $60,000 in debt means the taxpayer now has only $40,000 in liabilities).
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The highly experienced Tax Attorneys, Accountants and Enrolled Agents will help you find the tax solution that will work best for your specific situation. Whether you have just fallen behind on your taxes or have been struggling with the IRS for years, we will help you get back into tax compliance quickly and efficiently.