If you owe money to the IRS and don’t know what an offer in compromise is, you may be missing out on a great opportunity. Generally speaking, an offer in compromise is an agreement that is made between the IRS and the taxpayer. It says that the taxpayer is able to settle his liability for less than the amount that is owed. In short, this means that the taxpayer gets out of debt and the IRS more or less takes a loss. While an offer in compromise sounds like the best type of tax settlement, it is not one that every taxpayer can take full advantage of.
The IRS will not accept an offer in compromise unless the taxpayer can show that they are facing special circumstances. The reason for this is that the IRS loses money with each offer in compromise that they accept. Since they are taking less money to settle the debt they are not collecting the entire amount due. As you can imagine, they only want to do this if there is no other option. But in most cases, there are other options such as having the taxpayer pay in installments.
The IRS will not even think about accepting an offer in compromise unless the amount offered by the taxpayer is equal to or greater than what the IRS determines to be the reasonable collection potential. The IRS decides what the reasonable collection potential should be based on the taxpayer’s ability to pay, as well a how many assets they have.
An offer in compromise is used to settle tax debt. It is important that the taxpayer realize that an offer in compromise is not always the right answer. The IRS does make it difficult to receive this form of relief. There are strict filing requirements, lots of paperwork and calculations that need to be done in the filing. Those who need help deciding if an offer in compromise is right or to get started, should contact a tax professional.
Get offer in compromise help. Our tax team can efficiently and effectively evaluate your financial situation to see if you qualify. If you don’t we offer a variety of other tax relief services that can help get you back on track to financial freedom.
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