What is an Offer in Compromise? An Offer in Compromise is an agreement between a taxpayer and the IRS. The agreement allows the taxpayer to settle their tax debt for less than they currently owe. This allows the taxpayer to resolve their outstanding tax liabilities and get back to paying taxes in usual ways.
Who Qualifies for an Offer In Compromise?
To be eligible for an Offer in Compromise, you must have a significant amount of outstanding taxes. Usually, you must owe at least $20,000 or even more than that. If you have only a few thousand dollars of unpaid taxes, the IRS tries to get the money by traditional collection methods. In addition to having a large outstanding tax liability, most people who qualify have modest, middle-class incomes. The IRS looks at whether they’re likely to collect the taxes without making the compromise. That means looking at the taxpayer’s income and assets.
What’s the Compromise?
When a person qualifies for an Offer In Compromise, the court looks for an amount that represents the payer’s disposable income in one year. They take the person’s income and deduct for allowable expenses. That doesn’t mean that you can pay a small amount by making sure you have high housing and transportation costs. Instead, the IRS allows a reasonable expenditure for these living costs. A person’s remaining, disposal income over the course of 12 months becomes the amount of the compromise. The taxpayer can pay the amount in a lump sum, or in monthly payments.
How Do I Get an Offer In Compromise?
You request an Offer In Compromise by filing IRS form 656. You must pay an application fee. For the IRS to approve your application, you must submit all of your tax returns and make estimated tax payments for the current tax year. Working with a qualified tax attorney can help you ensure that you make a reasonable request for an Offer in Compromise that the IRS is likely to approve.
What is an Offer in Compromise?
It’s an option that very well may help you solve your tax issue. IRS problems rarely get solved by ignoring them. Call me at 888-438-6474 and let’s figure out a solution to your problem once and for all.