An IRS Offer In Compromise is a program offered by the IRS, and authorized by the Internal Revenue Code, to help those who are unable to pay their tax obligations in full. The IRS will consider your unique set of facts and circumstances. There are four factors to consider:
- Ability to pay;
- Expenses; and
- Asset equity.
In order to obtain an IRS Offer In Compromise the IRS will consider “if the amount offered represents the most the IRS could expect to collect within a reasonable period of time.”
Basis for IRS Offer In Compromise
One of two factors must be established in order for the IRS to settle the liability for less than you owe.
- Doubt as to liability: Opem Tax Resolution may attempt to prove that the amount of tax or any penalties being billed by the IRS are wrong.This Offer in Compromise is generally used if a taxpayer was unable to defend himself against an assessment by the IRS, and has now discovered additional evidence to prove that the amount being billed is wrong.IRS Offers in Compromise based on doubt as to liability are reviewed by the Examination Division of the IRS, rather than the Collection Division. The Examination Division reviews such IRS Offers in Compromise, the Examination Division uses guidelines similar to those used in making audit determinations. Opem Tax Resolution will attempt to establish a valid question of law or fact that would render the liability in question doubtful.
- Doubt as to Collectibility:This is the most common type of Offer in Compromise. Under this type of Offer in Compromise the taxpayer makes a representation that based on the taxpayer’s financial condition IRS will not be able to collect the entire tax bill from the taxpayer. This Offer in Compromise requires a detailed review of the taxpayer’s financial condition.The amount of this Offer in Compromise must reflect the amount of the equity in taxpayer’s assets plus the amount that the IRS could collect from taxpayer’s future income.
Special consideration could be made for taxpayer’s advanced age or other special circumstances. Our tax attorneys often point out to the IRS the possibilities that our client is in ill heath and may not survive to pay the entire tax liability in question or that the taxpayer’s skill are no longer as well compensated as they have been in previous years. The more special considerations our tax attorneys are able to present regarding each client’s financial and personal circumstances, the more likely that the IRS will accept the proposed Offer in Compromise.
“PENNIES ON THE DOLLAR”
You should look at all other payment options before turning to an IRS Offer In Compromise. A very large percentage of the offers under the IRS Offer in Compromise program are denied. Many firms oversell this option, because, all things being equal, the IRS Offer In Compromise appears to be the best option. “Pay Pennies on the Dollar” sounds like a GREAT deal, but if you pay a service to submit your offer and the offer is denied, you are left with your IRS problem. “If it sounds too good to be true, it probably is” So, be careful.