When you receive IRS Notice CP39 in the mail, it means that your current or former spouse’s refund has been taken and applied to other taxes.
For some people, this notice is their first indication that a tax debt existed. They believed that all previous tax returns had been completed accurately and submitted on time, so where did this unexpected liability come from?
If you weren’t aware of a problem until now, there are a few options available to you.
Filing an Innocent Spouse Claim
When you request innocent spouse relief, the IRS may absolve you of any responsibility for paying taxes and any accrued interest or penalties if your current or former spouse made errors on your tax return.
To qualify, you must file Form 8857 and meet the following criteria:
- You filed a joint return that contains errors inputted by your spouse.
- At the time you signed it, you did not know or had no reason to know that it contained inaccurate or false information.
- Facts and circumstances suggest that it would be unfair to hold you accountable for the tax debt.
- Neither of you transferred the property to one another to defraud the IRS or any other third party, such as a creditor.
You can seek relief from obligations arising from individual or self-employment income taxes. Business taxes, household employment taxes, and Individual Shared Responsibility payments do not qualify.
Request A Payment Arrangement
If the Notice CP39 was not sent in error and you do have an outstanding tax liability, you will need to address it immediately to prevent interest and penalties from building up. The letter will indicate the due date for paying the balance- if you need more time, call the number listed and request an extension.
If you can’t afford to pay the full amount you owe, the following options may be available to you.
You can negotiate with the IRS to repay the amount you owe over time. To qualify, you must have filed all of your returns and be current on your taxes for the present year. If you owe $10,000 or less (including interest and penalties) and have filed and paid all taxes for the last five years, you are legally entitled to apply for the guaranteed installment agreement, which gives you three years to pay the arrears in full.
Depending on your income and how you propose to make the payments, the fee for obtaining an installment agreement ranges from $43 to $225. If you are a low-income taxpayer, this fee will be waived if you agree to make electronic debit payments.
Offer In Compromise
Although difficult to qualify for, an offer in compromise (OIC) lets you settle the debt for less than the total balance. The IRS will only consider an offer if any of the following conditions apply to your circumstances:
- Based on your income and reasonable expenses, there is doubt that they will be able to collect the full amount before the collection statute expiration date.
- There is legitimate doubt that you owe that much tax.
- Collecting the tax would result in an unfair degree of economic hardship.
If you want to make an offer in compromise, it is essential that you work with a dedicated tax law firm that specializes in helping taxpayers overcome liability challenges. At Paladini Law, we know what the IRS takes into account before accepting an OIC, which is why over 95% of the proposals we present are accepted.
Speak with a New Jersey Tax Attorney
When you receive a Notice CP39 about a tax debt you didn’t know you had, the worst thing you can do is ignore it. Paladini Law will work with you to review potential solutions and help restore you to compliance if you have any outstanding returns.
Attorney Brad Paladini holds a Master of Laws in Taxation, putting him in the best position to identify the right solution for your tax liability, whether it be filing for innocent spouse relief, requesting a payment plan, or proposing an offer in compromise. To schedule a consultation, please call 201-381-4472 or complete our online form.