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.

 

Print Print | Sitemap
© Showalter and Co CPA