Offers in Compromise

Many people have heard about the IRS’ “Offers in Compromise” program, but it is very misunderstood.

  • It is not a give-away program
  • Be aware of scam artists promising “guaranteed results” and “pennies-on-the dollar” settlements
  • If you have the ability to pay within statute of limitations, IRS will not settle for less
  • Ability to pay based on equity in assets plus present value of your monthly ability to pay
  • A “rough” OIC determination included free with game plan

Offers based on doubt as to liability

  • Used when taxpayer believes amount of tax debt is incorrect
  • Example: Statute of limitations has expired on the taxpayer’s ability to file an amended return
  • Should be submitted with the assistance of a qualified tax professional

Offers based on doubt as to collectibility

  • Used when tax debt is correct but taxpayer is not able to pay
  • If you offer more than IRS determines it will ever be able to collect, IRS may be willing to settle
  • Any good representative can make a rough estimate at your initial meeting; don’t pay thousands of dollars in fees to someone without that determination made up front
  • Tax Problem Solver, Inc. can review your OIC paperwork before you pay someone

CAUTION: Filing an offer in compromise extends the statute of limitations on collections if not accepted. Further, if your offer is accepted, you will be on a 5-year probationary period.

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