[adsenseyu1]Tax Debt Help Offer in Compromise

 

Offer in Compromise:

The Offer in Compromise is a great program that the IRS has in place for people that simply do not have the ability to repay their tax debt.  The OIC allows them to pay a much smaller percentage of what they owe. This program is based on their ability to pay and not the amount they owe to the IRS.

Sounds great, doesn’t it!  The problem is that trying to do this yourself often results in failure.  More than 85% of taxpayers who submit the forms to the IRS for and Offer in Compromise are rejected. You need to know which of the Offer in Compromise types  is your best bet to gain approval.

There are three different types of Offer in Compromise you may qualify for.

  1. Doubt as to Collectability – You are unable to pay!  Serious doubt exists that you, the taxpayer, will ever be able to pay the full amount of the tax liability that the IRS says you owe within the remainder of the statutory period for collection.    Example:   You as a taxpayer owes $25,000.  You agree that this tax amount is correct, but your monthly income does not meet your necessary living expenses.  You do not own any real property and do not have the ability to fully pay the liability now or through any monthly installments.
  2. Doubt as to Liability – “Hey, this is not my tax debt!”  There is a legitimate doubt about if the assessed tax liability is, indeed, correct.  The possible reasons to submit a doubt as to liability offer include: (1) the examiner made a mistake interpreting the law (2) the examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.
  3. Effective Tax Administration – “Special Circumstances”  So you have agreed that the tax debt is correct and the IRS has decided there is potential to collect the full amount of the tax owed.  However,  an exceptional circumstance exists that would still allow the IRS to consider an OIC. To be eligible for compromise under Effective Tax Administration, you as a taxpayer, must demonstrate that the collection of the tax debt would create an economic hardship or would be unfair and inequitable.   Example:  You have assets that are sufficient to cover the tax liability the IRS says you owe but you are going to need those assets to help pay for the medical care of a child that is ill.

One other thing.  The Offer in Compromise is what most of the so called Tax Relief Firms advertise.  This is the program that you may have read about where you can supposedly settle your IRS debt by “paying pennies on the dollar”.  The IRS, on average, resolves less than one percent of the balances due through this program.  They consider it a last resort method of collection.

Many of the programs that are available to taxpayers can be done on your own.  It is my opinion that submitting on Offer in Compromise should normally be done by a trained tax professional.  You have to know what the IRS is going to be looking at.  There are simply too many things that can go wrong with you trying to do this yourself and you only get one shot at this.  Make sure it is done correctly.   An accepted offer in Compromise historically reduces the amount you owe between 35% and 80%.

If you need help with this I can recommend people that will be able to do this right the first time.

IRS Tax Debt Help