Offers in Compromise – Debt Collection Alternatives

Offers in Compromise I.R.S. Debt Collection Alternatives

If you cannot afford to pay the full amount of your tax debt owed to the Internal Revenue Service (“I.R.S.”), or do not believe that you legally owe such debt, there may be collection alternatives available to you. One of these alternatives is the Offers in Compromise.

Grounds to Submit

An offer in compromise allows the I.R.S. to accept less than the taxpayer’s full tax liability as settlement of the debt owed. There are three grounds upon which a taxpayer may submit an offer in compromise: (1) doubt as to collectability; (2) doubt as to liability; or (3) effective tax administration.

Offers based on Doubt as to Collectability

For an offer in compromise based on doubt as to collectability, the taxpayer must be unable to pay the full amount of the debt. The I.R.S. will instead accept an offer that is equal to or in excess of the reasonable collection potential. The reasonable collection potential is utilized by the I.R.S. to calculate the amount a taxpayer is able to pay and looks at assets, property, and future income. However, if there are special circumstances that make it appropriate for the I.R.S. to accept less than the reasonable collection potential, such as full payment of the reasonable collection potential causing economic hardship, the I.R.S. may take these circumstances into consideration and accept less than the taxpayer’s reasonable collection potential.

Offers based on Doubt as to Liability

For an offer based on doubt as to liability, there must be a genuine legal dispute as to the amount owed by the taxpayer. This offer is submitted when a taxpayer legitimately believes that he or she does not owe all or part of the assessed tax debt. For instance, the I.R.S. provides the example of a taxpayer missing a meeting with an auditor due to a natural disaster and having all expenses disallowed (even though he had appropriate documentation) as an appropriate use of the offer based on doubt as to liability.

Offers based on Effective Tax Administration

Offers based on effective tax administration may be accepted on one of two grounds – effective tax administration or public policy concerns. To present an offer based on effective tax administration on either basis, the taxpayer must be able to pay the balance in full. For an offer based on an economic hardship basis, the I.R.S. will accept such as offer if collection of the full amount owed would cause the taxpayer economic hardship. Economic hardship occurs if payment of the debt in full would result in the inability to pay necessary basic living expenses.

Offers based on Public Policy

Offers based on public policy concerns are granted very rarely and are subject to a very steep burden on the taxpayer to demonstrate that the circumstances are compelling enough to justify compromise even in the light the inherent inequity of granting such an offer. For instance, acceptance of an offer based on public policy concerns may promote effective tax administration where the I.R.S. has made a processing error, the taxpayer relied on incorrect advice from the I.R.S., or where there has been unreasonable delay by the I.R.S. Additionally, fraudulent or criminal acts by third parties will be considered as well as the effect that rejection of the offer would have on the taxpayer’s community. However, it must always be kept in mind that public policy concerns do not encompass situations where the taxpayer believes that the tax law itself is unfair; there must be some kind of extraordinary circumstances related to the taxpayer’s individual situation.

Offers of any kind can either be a lump sum cash offer or a periodic payment offer. Lump sum offers are payable in not more than five installments within five months of acceptance of the offer and must be submitted with a payment of 20% of the total offer amount. Periodic payment offers are payable in more than five installments and cannot exceed a total of twenty-four months.

Co-authored by: Attorney Bradley C. Sagraves & Attorney Kaitlyn A. Sell


What is a Trademark?

What is a Trademark?

      What is a Trademark?

A trademark is any word, name, symbol, or device used to identify the source or origin of goods/services and to distinguish the goods/services from others. In essence, a trademark designates a particular quality and reputation, which are developed over a period of time.  When a source indicator is used in connection with the provision of services, it is called a service mark; a service mark is otherwise identical to a trademark, but because of historical legal concepts, the two are still differentiated.  With many products, a trademark can be of extreme value. The use of trademarks goes back at least to the early Egyptians.

What can it protect?

The overall image of a product, including its packaging, configuration, design, or overall impression, can sometimes be protected as a trademark and is referred to as the “trade dress” of the goods/services. Examples of trade dress include the unique design of the Coca Cola bottle and the pink color of Owens-Corning fiberglass.

Trademark rights for a mark can prevent others from using similar marks on goods/services that would confuse the public as to the source or origin of the goods/services. A number of factors are considered when determining whether there is a likelihood of confusion. Among the factors are the similarity of the marks, the similarity of the goods/services, and the strength of a mark. Just as with patents, a mark may infringe another without actual copying. However, if copying is proved, enhanced damages (perhaps, treble) can be received. Moreover, although trademark rights may be used to prevent others from using confusingly similar marks, they cannot prevent others from providing or selling the same goods/services under a non-confusing mark.

Co-authors: John L. Wood and Tracy G. Edmundson

Emergency Rental Assistance Payments

Emergency Rental Assistance Payments

In response to the COVID-19 pandemic and in furtherance of the goal of keeping families in their homes during this unprecedented time, the Emergency Rental Assistance program was designed to help individuals who are unable to make rental or utilities payments. The United States Treasury has paid out a total of $46.55 billion under two programs (ERA1 and ERA2) to states, territories, and local governments to be utilized for this purpose. Not only are these payments available for rent and utilities, but these payments can also be utilized for emergency rental assistance resources, security deposits and application fees, working with the courts in order to facilitate eviction diversion programs, paying past due rental payments, and helping currently homeless individuals gain access to housing.

Individuals may qualify for these payments by providing documentation of the following information: (1) they are obligated to pay rent on a residential dwelling; (2) one or more individuals within the home has qualified for unemployment benefits, experienced a reduction in income, incurred significant costs or financial hardship as a result of the COVID-19 pandemic, or demonstrate a risk of homelessness; and (3) either, depending on the program, the household income is less than or equal to 80% of the median income for the area or the household qualified as a low-income family under 42 U.S.C. § 1437a(b). Individuals may apply for assistance through their applicable state program. For instance, residents of Tennessee (other than Knox, Davidson, Rutherford, and Shelby County residents) must apply through the Tennessee Housing Development Agency, while residents of the counties listed above must apply through their individual county’s program. Residents of Knox County must apply through Knox Housing Assistance.

Pursuant to guidance issued by the I.R.S. on May 18, 2021, payments received by tenants as part of the Emergency Rental Assistance program will not be included in gross income. These payments are not included regardless of whether used for rent, utilities, or home energy expenses, or whether such payments were made directly to the tenant or to the landlord or utility provider. However, payment received on behalf of a tenant are still includable in the gross income of the landlord or utilities provider.

Co-authored by Attorney Bradley C. Sagraves and Attorney Kaitlyn A. Sell