IRS Offer in Compromise Tips – What You Need to Know

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If you’re facing a bank levy, unfiled taxes, or wage garnishment an  Offer in Compromise may be the answer you’re looking for to solve your IRS problem.

But first what is an Offer in Compromise?

There are three types of Offer in Compromise. Keep reading to learn what they are.

Young woman studying at desk depicting an attorney explaining IRS Offer in Compromise Tips.

Offer in Compromise Based Upon Doubt on Collectibility

In this particular type of offer, you would be asserting that there is no way that you will be able to pay the liability to your IRS Problem.

The amount of the offer depends on a math equation that is:

((Monthly Disposable Income x 12) + Value of Your Assets)) = Amount of Your Offer.

An example would be if you had $300 dollars a month in disposable income x 12. That would be $3600, and assuming you had no equity in assets, your offer amount would be $3600.

It doesn’t matter how much you owe, it only matters how much you can afford to pay. So your offer amount would be the same whether you owed $20,000 or $200,000 or $2,000,000.

The OIC is a program developed by Congress that allows taxpayers to settle for less than they owe the IRS. Sometimes for pennies on the dollar.

The OIC is a program developed by Congress that allows taxpayers to settle for less than they owe the IRS. Sometimes for pennies on the dollar. It is far different for their normal tax payment plan.

Offer in Compromise is Doubt as to Liability

In this type of offer, you would be asserting that the liability of the tax is not actually yours. So you should be able to pay less.

A common scenario would be in the case of Juniors. Take John Smith Sr. and John Smith Jr. with similar social security numbers. If son ends up with dad’s liability, then the son might file an Offer in Compromise. This is based on Doubt as to Liability rather than his ability to pay that liability.

This type of offer is rare because there’s almost always a better way to resolve the issue.

Offer in Compromise is Effective Tax Administration

I don’t know why they call it this, it’s sort of a silly name if you ask me, but it stands for the following situation.

Let’s say you don’t have much of a monthly disposable income. But you do have equity in assets. For example, maybe you’re retired and living in a home you own the deed to.

If you sold your home, you would be able to pay in full your tax liability. But if sold it you would have to pay rent, which you couldn’t afford on a monthly basis because you were on a fixed income.

At this, the IRS makes up less than the full amount of the liability and forgets the balance.

You can't just call the IRS and offer them $5000 to settle a $10,000 liability. It just doesn't work that way.

You can’t just call the IRS and offer them $5000 to settle a $10,000 liability. It just doesn’t work that way.

Those are the three types of Offer in Compromise deals. The only way you can do it is in the context of what I just described.

If you need IRS Help or have questions about an Offers in Compromise or other issue call me at (888)-438-6474.  If you have questions about IRS Forms you can view my videos on that page as well.

Enjoy the videos!

I’ve heard the IRS sometimes make deals, is that true?

The Three Types of IRS Offer in Compromise

IRS Offer in Compromise – Doubt as to Liability

IRS Offer in Compromise – Effective Tax Administration

Owe the IRS a Lot of Money is There Anyway Out?

Tampa Tax Attorney Shares IRS Help Secrets

What will you do if the amount you owe the IRS in back taxes is so large that you could never possibly pay it off? You look into whether or not you qualify for an Offer in Compromise.

An offer in compromise offers taxpayers the chance to get a fresh start. An offer amount is determined based upon the taxpayer’s inability to pay. The IRS considers current financial situations, the ability to pay, and equity in assets among other things. If you qualify, you can save thousands of dollars in taxes as well as penalties and interest.

An Offer in Compromise is a program set up by Congress to allow taxpayers to settle their tax debts for less. It allows a taxpayer who owes more than they can afford to pay to settle for less, sometimes much less.

There are three types of Offer.

1. Cash Offer – Payable within five months of acceptance of the Offer.

2. Short-Term Deferred Offer – payable in equal monthly installments over a 24 month period.

3. Long-Term Deferred Offer – payable in equal monthly installments over the number of months that you have remaining on the Collection Statute.

NO one can tell you over a brief telephone conversation (or even in person for that matter) that there’s a guarantee to have your Offer accepted. This is straight deception. Those companies prey upon your desperation and your eagerness to hear good news. Don’t fall for it. You know that if it’s too good to be true that it is!

Before you can find out if an Offer in Compromise is right for you, there must be a detailed financial analysis. As your tax lawyer will submit a Power of Attorney on your behalf and speak to the IRS so that you don’t have to! Then we will submit a detailed Freedom of Information Act request so that we can find out what the IRS thinks is going on with your case.

Then we will have you fill out a Collection Information Statement and advise you how to best place yourself in a position to have your Offer accepted. Most companies that file Offers take you actually as you are without any regard to simple changes that you can make to your financial affairs to better ensure an acceptance of your Offer.

Call us at (888)GET-MISH!

Now that’s the real deal and the simple truth. I don’t have anything to hide and want you to get an Offer accepted if it’s the right thing for your situation. I have no interest in filing an Offer for you that won’t be accepted. It’s not the right thing to do and I won’t do it. Call our toll-free at (888) 438-6474. We represent people from Tampa to the Timbuktu and everywhere in between.

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