Offer in Compromise


Get Help with Your Offer in Compromise

Life can be very unpredictable. Through no fault of your own, losing your job, unemployment, changing business income, huge medical bills, and other unexpected monthly expenses can result in a huge tax obligation that you cannot pay in full. Luckily for you, those who want to pay their taxes but cannot afford a lump sum now have several potential solutions. You might qualify for one of the major tax relief solutions, an IRS settlement offer known as an Offer in Compromise. An Offer in Compromise is one of the most underused and misunderstood IRS tax relief options, but it can be the perfect solution for IRS tax relief. At Showalter CPA, we will work closely with you so that you understand your tax situation and how to resolve it. We will provide all the Offer in Compromise assistance you need, starting with whether you qualify for the program and the details of the low-income certification guidelines.


What is an IRS Offer in Compromise?

An Offer in Compromise is an IRS tax relief settlement between the taxpayer and the IRS, when the IRS usually accepts less than the entire tax debt owed. If you qualify for an IRS settlement offer, all your tax debt can be cleared. In only 2018, the IRS accepted nearly 30,000 offers which resulted in around $287 million in tax relief.

Reduce Your IRS Debt with an Offer in Compromise

Qualifying for an offer in compromise settlement can save you thousands of dollars in taxes, penalties and interest.  An offer in compromise is an agreement between a taxpayer and the IRS to settle the taxpayer’s tax due for less than the full amount owed.  Without special circumstances, an offer will not be accepted if the IRS believes that the liability can be paid in full as a lump sum or through a payment agreement. For example, if you owe the IRS 25,000 and make 250,000 per year – you would not qualify for an offer in compromise.


Beware of unscrupulous advertisers that claim tax debts can be settled through the offer in compromise program for pennies on the dollar.  The offer in compromise program is very complex and time consuming, sometimes taking up to two years to complete. Showalter CPA has the expertise and experience in working with the IRS to help expedite and take the stress out of the process.


Types of Offers in Compromise

Lump-Sum Offer. This requires a taxpayer to pay an agreed upon reduced amount to the IRS within five or less months from the date that the offer is approved. You must pay a 20% down payment when you submit the offer and an application fee to the IRS unless you qualify for a hardship. An offer in compromise can be quite complex so it is essential to receive Offer in Compromise help to complete the specifics of this offer. We have successfully submitted many offers in compromise that have allowed our clients to get their lives back on track and the IRS off their back.  


Periodic Payment Offer. This offer must be paid within 6 to 24 months. In addition to application fees, the first payment is the same 20% down payment required for lump sum cash offers. Showalter CPA offers free consultations to make sure you do not waste time and money submitting offers that are rejected by the IRS because you checked the wrong box or missed an item on one of the many forms.


Qualifications for an Offer in Compromise

For the most part, the IRS considers your unique set of facts and circumstances to determine if you qualify including your:

Ability to pay your taxes

Monthly income

Monthly expenses

Assets and equity


To qualify for an IRS settlement offer, the IRS must determine that one of the following conditions exist:


You cannot afford to pay the full tax amount due. The IRS will assess your situation and determine if you cannot afford to pay the full tax debt before the statute of limitations ends which is generally 10 years.


Economic hardship. Paying your full tax debt would cause you economic hardship. In most cases, you must already be working full time which is considered 30 hours per week for at least the next 3 months and still be unable to meet your basic needs if you pay your full tax debt owed. For example, you owe 100,000 but are working a minimum wage job.


Doubt over the tax debt you owe. When there is doubt over whether you actually owe the tax or there is doubt about the accuracy of the amount owed, the IRS may offer a settlement instead of using the time and money required for an in depth tax audit.


To be eligible for the any of the above IRS settlement offers, taxpayers must be sure that they have filed all their required tax returns on the appropriate forms and be current with estimated tax payments for business owners and self-employed individuals while keeping track of federal tax deposits for businesses with employees. The tremendous amount of paperwork that must be completed with perfect accuracy is enough to keep many taxpayers from settling with the IRS, but this does not have to be you. We have your back and can take on all the hard work.


Why not take advantage of the Offer in Compromise program that allows you to pay an amount you can afford to satisfy your entire tax liability, and it even includes the penalties and interest. Remember, the amount you pay is based on what you can afford and not on the amount you owe. The offer in compromise program allows any eligible taxpayer to pay what they can afford to pay regardless of the amount they owe. The Offer in Compromise is truly a fresh start. When an offer is accepted by the IRS and paid the taxpayer is then current with all their tax liabilities.


Once you become our client you will not have to speak to the IRS anymore. If they want information or to talk to you, they will have to go through us. The first step to getting tax problem help is calling us at (605) 646-3585 and scheduling a free, no obligation case evaluation with a Certified Public Accountant. During this meeting, we will discuss the details of the case and make plans to start the investigation phase of your case by gathering information, pulling transcripts, and finding out what the IRS knows about you.


The Dreaded Letter from the IRS

If you have received a tax notice, IRS letter, audit notice, or other tax correspondence from the IRS, a state agency, or a local agency, it can be difficult to know what to do next. We frequently represent clients with IRS penalties, interest, and taxes due, and we can help you, too. We have worked on items such as IRS Offers in Compromise and Penalty Abatements.


The Tax Help You Need

If you are ready to face your tax problems, we are here for you. We can help you relieve that huge stressful burden, so you feel lighter and free from all that stress. Do not face your tax issues alone. Our trained and certified tax professionals work diligently to find the best outcome we can on your tax issues. Turn to the Showalter CPA Firm, and let us put our tax resolution services to work for you. Call now for more information or to schedule a consultation at (605) 646-3585.


What is IRS Offer In Compromise?


The Offer in Compromise can be a great way to settle your tax debt for significantly less than you currently owe the IRS. On average, taxpayers who settle their debt using an Offer in Compromise end up paying less than 10 - 20% of the actual amount they owed to the IRS.


Here is how an IRS Offer in Compromise works:

  • You and the IRS acknowledge that there is no realistic way to pay off all your tax debt. This means that you do not have enough income to pay off your debt and do not have enough valuable assets that the IRS could seize to settle that debt. We prepare and offer to pay the IRS the maximum amount that you can afford even though that amount will be way less than the actual tax debt owed.
  • If the IRS accepts that the amount you offer to pay is the most that it could reasonably expect to collect from you, it will agree to compromise and lower your tax debt to match the amount you can pay.
  • The tax debt is considered to be paid in full once you have finished paying the agreed upon amount.


A tax debt can be settled with an offer in compromise for any one of the following reasons:

  • Doubt as to Liability – Doubt exists that the assessed tax is correct.
  • Doubt as to Collectability – Doubt exists that the taxpayer could ever pay the full amount of tax owed.
  • Effective Tax Administration – There is no doubt the tax is correct and could be collected but an exceptional circumstance exists that allows the IRS to consider a taxpayer’s offer in compromise.

In order to be eligible for an Offer in Compromise, the taxpayer needs to demonstrate that collection of the tax would create an economic hardship or would be unfair to the taxpayer.


We have many years of successful tax resolution negotiation experience and have education to solve your tax problems. Give us a call for a free tax consultation at 605-646-3585.


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