Offer In Compromise
What is an offer in compromise?
Do I qualify to do the Offer in Compromise?
Why would the IRS agree to accept less money than it is owed?
How do I know if an offer in compromise is the right solution?
What happens after my Offer in Compromise is accepted?
Can a person currently involved in an installment agreement still make an Offer in Compromise?
How long does it take before the IRS accepts or rejects an Offer in Compromise?
What is an offer in compromise?
When a taxpayer can't pay a tax debt in full, or if there is a dispute with the amount the IRS claims the taxpayer owes, the taxpayer may propose to resolve the matter with an Offer in Compromise. An Offer in Compromise, if accepted by the IRS, settles a taxpayer's liability for less than the full amount owed. The ultimate goal is a resolution that is in both the government's and the taxpayer's best interest.
If the IRS agrees to your Offer in Compromise, it may agree to accept less than full payment under certain circumstances, including:
- doubt as to liability
- doubt as to collectability
- hardship
In order to maximize the possibility that an Offer in Compromise is accepted by the IRS, it is important to work with a tax consultant who understands the intricacies of this negotiation process. It is more or an art than a science. Even issues completely outside of the control of a taxpayer can affect the IRS decision. Equity Search has handled thousands of Offers in Compromise with great success. They can help determine whether an Offer in Compromise is the best approach to solving a particular problem, and they know exactly how to present a case in order to maximize the chance that the offer will be accepted.
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Do I qualify to do the Offer in Compromise?
In order to determine whether you can resolve your IRS debt with the Offer in Compromise, you will be required to complete the IRS Form 433-A Collection Information Statement. A fill-in copy of the form can be accessed through the link below. The form must be completed as accurately as possible. If certain items don’t apply, put N/A or NONE.
http://www.irs.gov/pub/irs-fill/f433a.pdf
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Why would the IRS agree to accept less money than it is owed?
The ultimate goal of an Offer in Compromise is a resolution that is in the government's and the taxpayer's best interests. The IRS considers the following as reasons for a compromise:
- Doubt as to liability: Taxpayer demonstrated that it is not clear whether the amount of money the IRS claims is owed is accurate
- Doubt as to collectibility: Taxpayer shows the IRS that, based upon your assets and income, you can’’t afford to pay them the full amount you owe in a reasonable period of time.
- Effective tax administration offer: In rare cases, the IRS may allow you to pay less if you can show that it would be unfair to require you to pay the whole amount even if you had the means to do so. For example, if you were retired, and could only pay your debt by selling your home.
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How do I know if an offer in compromise is the right solution?
The only way to determine whether an Offer in Compromise is the right solution is to examine your complete financial situation and all appropriate tax solution options. A qualified tax consultant will look at your complete financial situation and tax problems, and help you find the best solution. Equity Search offers free consultations to help make this determination.
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What happens after my Offer in Compromise is accepted?
After an Offer in Compromise is accepted, the taxpayer must pay the offered amount. Afterward, tax liens and levies and released, and the taxpayer gets a fresh start.
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Can a person currently involved in an installment agreement still make an Offer in Compromise?
Yes. In cases where hardship is demonstrated, the installment agreement can sometimes be stopped.
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How long does it take before the IRS accepts or rejects an Offer in Compromise?
This process can take some time, from six months to more than a year. The IRS ordinarily withholds collection action while they consider an offer. However, unless the negotiations are handled properly, payments could be mandated that will not reduce the amount of the offer, and could even result in an increase in final payment. Equity Search can ensure that these negotiations are handled properly from the beginning so that you don’t pay any more than absolutely required
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