Offer in Compromise: A Tax Debt Settlement Option

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It’s not uncommon for a taxpayer to not be able to pay his full tax bill.

In these cases, an Offer in Compromise may allow the taxpayer to settle his tax debt for less than the amount he owes in full.

It’s important to know that the IRS does not always agree to an Offer in Compromise, but it may help to have a lawyer guide you through the correct process.

If you owe the IRS money from back taxes, ask a tax attorney if you could qualify for this tax settlement option. Talk to a local attorney today for free:

Do you Qualify for Offer in Compromise?

Qualifying for an Offer in Compromise is not an easy or quick process.

Before the IRS considers the offer, you must have all of your taxes filed and you must not be in the middle of or about to file for bankruptcy.

There are some main areas that the IRS looks at before granting you an Offer in Compromise:

  • your ability to pay
  • your income
  • your expenses and your assets

There are three types of Offers in Compromise that the IRS may consider, depending on your financial situation:

  • Doubt as to Collectability: May be granted if you are not able to pay for the taxes in full either by liquidating your assets or have other tax debt installment agreement plans
  • Doubt as to Liability: May be granted if you do not believe that you owe the assessed taxes to the IRS.
  • Effective Tax Administration (ETA): May be granted if you agree with the tax amount that you owe to the IRS but are unable to pay the full amount due to an exceptional circumstance.

In order to submit an Offer in Compromise, you must complete the correct paperwork and follow a strict process, which can often be time-consuming and confusing.This is why many people choose to work with a local tax attorney when pursuing an Offer in Compromise for their tax debt.

 

 

 

 

 

Offer in Compromise Contract

Besides all the forms and calculations, the IRS also has terms and conditions that need to be fulfilled as well. These include:

  • You must pay the tax debt offer amount in full.
  • File and pay your taxes on-time for the next five years.
  • The IRS is entitled to keep any tax credits, refunds, and payments prior to submitting the Offer in Compromise.
  • During the year of the Offer in Compromise you will not receive a tax refund of any kind since any refunds due will be applied to your tax debt.

If these conditions are not met, the original amount owed to the IRS may be restored, and the IRS may resume collection attempts such as garnishments and liens.

As you can see, there are a lot of factors to consider if you want to join in an offer in comprise contract with the IRS.

Talk to a Local Tax Lawyer Today for Free

It can be hectic and stressful trying to figure out how to move forward and get out from your tax debt. This process can involve a lot of paperwork and negotiating with the IRS, but working with a local tax lawyer could help take some of the stress off of you.

You can arrange a free consultation with a tax attorney near you today. Learn your rights and your options when dealing with the IRS.

Simply fill out the quick case evaluation form below to get started on the process now.