As a founding father (my favorite founding father in fact) once said, “Our new Constitution is now established, everything seems to promise it will be durable; but, in this world, nothing is certain except death and taxes.” It is unfortunately that time of the year as April 18, 2023, slowly begins to creep up on all of us, and we all begin feeling the pressures of filing our taxes. For some of us, we have been put in an unfortunate situation where we owe unpaid taxes. This unpaid tax liability can be the result of a variety of events, and the process of being charged with this tax liability can be both long and confusing. In particular, I am reminded of Clients who own and operate a family business. A sudden unforeseen event occurs and a large debt results. Now not only are my Clients attempting to resolve a divorce, but they are also attempting to manage a tax liability.
Accordingly, I want to take this time, for all the families operating a family-owned business, to talk about an option available to you, should you find yourself indebted to the Georgia Department of Revenue (GDR). In Georgia, taxpayers have the option to file an Offer in Compromise (OIC-1) with the GDR. The process is as follows:
First, you will need to verify the existing tax liability and the amount currently assessed against you. You can do this by making an account with the Georgia Tax Center (https://gtc.dor.ga.gov/_/). Be sure to download the latest account statement, which should indicate to you how much of your liability is from taxes, penalties, and/or interest.
Second, you will likely want to reach out to GDR directly. GDR has specialist that deal with OIC-1 requests, and they will be able to assist you in filling out an OIC-1. You should know that specialists are limited in what they can say and do for your individual case. Know that if you are seeking OIC-1 because you question the validity of the tax liability, a GDR specialists cannot help you, and you will need to consult a tax specialist. OIC-1 is available to persons who question the validity of the tax assessment, but you are essentially creating a dispute with GDR and you will need to support your adversarial position. If you are seeking OIC-1 because of “economic hardship” or “doubt of collectability” then the Specialists will be able to assist you more readily.
Third, you will need to fill out the appropriate forms. Generally, there are only two forms that you will need to fill out: a CD-14C and an OIC-1. The CD-14 is a catalogue of your current assets along with some documentation supporting your assertions. GDR, in generally, does not care about the actual value of your assets; in fact, I have previously been told that reporting a million dollars in assets will not affect the OIC-1 as it is based on income, not assets (Note: the million dollars in assets was an exaggeration but know that having substantial assets will play little role in your OIC-1). The OIC-1 is the Offer in Compromise form, and it is fairly straightforward. If you are having trouble determining how to fill out the form, you can query GDR specialists or seek out the aid of a legal professional.
Fourth, you will need to determine the value in compromise. This is the hardest part to determine as really there is no guarantee that GDR will forgive any amount of the tax liability. GDR much more easily forgives assessed penalties and interest, but the actual liability is likely not to be forgiven. GDR will almost always agree to a payment plan and participating in the payment plan will stop the assessment of future penalties and interest. This is why you will want to file an OIC-1 as you as possible. Also, the sooner you file, the more likely GDR will waive the penalties and interest. Note again, that they may not forgive any or all penalties and interest, and should they not forgive any, it may be valuable to consult with a tax attorney about potential options.
Fifth, file the form with the necessary filing fee. The form can be filed electronically or emailed, but the filing fee will need to be mailed as a check. Note that you may not have to pay a fee if you qualify with a low-income certification.
After this is complete you should have the results of your offer in less than a month from filing. The process can be a bit confusing, but you do not necessarily need legal assistance to complete this process and get your tax liability under control. Frankly, you may not be able to afford legal assistance and may be in a position where your tax burden could escalate without immediate action. The Offer in Compromise may be your best solution, and it may stop GDR was levying your property, both personal and real.
It is hard for families to own and operate a family business, and taxes are a constant factor that will affect you and your families decisions. Be proactive in your finances and know that you can find a solution (or contact someone who can help).