A Fresh Start for Many? Economic Downturn Means an Upturn in Favorable Tax Settlements

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Jason B. Freeman

Jason B. Freeman

Managing Member

214.984.3410
jason@freemanlaw.com

Mr. Freeman is the founding member of Freeman Law, PLLC. He is a dual-credentialed attorney-CPA, author, law professor, and trial attorney.

Mr. Freeman has been named by Chambers & Partners as among the leading tax and litigation attorneys in the United States and to U.S. News and World Report’s Best Lawyers in America list. He is a former recipient of the American Bar Association’s “On the Rise – Top 40 Young Lawyers” in America award. Mr. Freeman was named the “Leading Tax Controversy Litigation Attorney of the Year” for the State of Texas for 2019 and 2020 by AI.

Mr. Freeman has been recognized multiple times by D Magazine , a D Magazine Partner service, as one of the Best Lawyers in Dallas, and as a Super Lawyer by Super Lawyers, a Thomson Reuters service. He has previously been recognized by Super Lawyers as a Top 100 Up-And-Coming Attorney in Texas.

Mr. Freeman currently serves as the chairman of the Texas Society of CPAs (TXCPA). He is a former chairman of the Dallas Society of CPAs (TXCPA-Dallas). Mr. Freeman also served multiple terms as the President of the North Texas chapter of the American Academy of Attorney-CPAs. He has been previously recognized as the Young CPA of the Year in the State of Texas (an award given to only one CPA in the state of Texas under 40).

As the threat of Coronavirus spreads, many taxpayers face unprecedented economic challenges.  The threat of commercial slowdowns and recession leaves millions in uncharted territory.  Many Americans face the added anxiety of past tax debts. And the threat of a lien or levy by the IRS, a so-called “super-creditor,” leaves many taxpayers on edge—and looking for a fresh start.

For many taxpayers, the solution may be an IRS Offer in Compromise.  For better or worse, an economic downturn increases the ability for thousands of Americans to settle their outstanding tax debt with the IRS.  That means that for many, now may be the time to take advantage of the economic uncertainty and to position themselves for a successful tax settlement—and a fresh start.

An offer in compromise (OIC) is an agreement between a taxpayer and the Internal Revenue Service to settle a tax liability for less than the full amount owed.  For many taxpayers, the IRS’s Offer in Compromise program provides a path toward a fresh start. To qualify, a taxpayer must submit an offer package (including all required documentation and forms) that meets IRS criteria.  Taxpayers should take care to comply with applicable IRS criteria—submitting a non-compliant or rejected offer may harm the taxpayer’s position or ability to submit a subsequent offer with success.

Before an offer in compromise can be considered, the taxpayer must (1) file all required tax returns, (2) have met certain timing requirements, (3) make all required estimated tax payments for the current year, and (4) make all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees. An offer will be immediately returned without further consideration if the taxpayer has not filed all required tax returns.

The IRS is authorized to settle a tax debt on one of three grounds: 1) a doubt that the tax liability can be collected in full, 2) a doubt as to the amount owed, or 3) to promote effective tax administration. The IRS can accept an OIC under the concept of “effective tax administration” in situations where collection in full could be achieved but would cause the taxpayer economic hardship or inequitable treatment.

Freeman Law has a number of online resources available to taxpayers with respect to the IRS’s Offer in Compromise Program, including A Fresh Start for Taxpayers: The Offer in Compromise.

Taxpayers with significant outstanding tax debt should consult with a tax attorney about the prospect of settling outstanding tax debt with the IRS.  Particularly in these uncertain economic times, taxpayers may have a unique opportunity to resolve tax debt through an offer in compromise.  And that could mean a fresh start for many.

 

State and Local Tax Services

Freeman Law works with tax clients across all industries, including manufacturing, services, technology, oil and gas, financial services, and real estate. State and local tax laws and rules are complex and vary from state to state. As states confront budgetary deficits due to declining tax revenues and increased government spending, tax authorities aggressively enforce state tax laws to recapture lost revenues.

At Freeman Law, our experienced attorneys regularly guide our clients through complex state and local tax issues—issues that are frequently changing as states seek to keep pace with technology and the evolution of business. Staying ahead requires sophisticated legal counsel dedicated to understanding the complex state tax issues that confront businesses and individuals. Schedule a consultation or call (214) 984-3410 to discuss your Local & State tax concerns and questions.