IRS Offer in Compromise – Is it the Right Solution for You?

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Some of the bigger “national” Offer in Compromise companies try to sell everyone an Offer in Compromise. The truth is that not everyone qualifies. There are strict requirements that come into play to determine whether a taxpayer qualifies to “settle for less” than what the IRS says they currently owe.  Click here to read or watch more IRS Help resources.

In a nutshell, there is an algebraic formula that comes into play to determine whether or not a taxpayer can get such a “deal.” (You knew algebra would finally come in handy right?) The exact nature of the algebra problem changes depending on the type of Offer payout you choose.

In short, there are three types of Offer in Compromise that are based upon Doubt as to Collectibility. Doubt as to Collectibility means that “it is more likely than not that the IRS will not be able to collect the tax debt within the time frame that they are lawfully able to do so. Normally this time frame is ten years but the ten years can be extended for a variety of reasons including prior rejected Offers in Compromise,

Normally this time frame is ten years but the ten years can be extended for a variety of reasons including prior rejected Offers in Compromise, the filing of Bankruptcies, various administrative IRS appeals and so on.

The three types of Offers in Compromise are as follows:

  1. 1.Cash Offer – payable within 5 months of acceptance of the Offer in Compromise
  2. 2.Short-Term Deferred Offer – payable in 24 equal monthly installments
  3. 3.Long-Term Deferred Offer – payable over the number of months left on the IRS Collection Statute in equal monthly installments.

 

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