Taking on IRS tax debt is a daunting task that presents many confusing issues. The majority of taxpayers are aware of the option to pay their IRS tax debt in full or pay the tax debt in monthly payments or installments. But there is another option, the IRS “Offer in Compromise.” Knowing the steps to success with an IRS Offer in Compromise, also commonly called IRS tax settlement is important, because if your offer is approved you can save thousands of dollars! It can play a critical role in the financial future of any delinquent taxpayer, impacting not only the taxpayer individually, but the financial health and welfare of their family’s future.
Settling Your IRS Tax Debt: In a nutshell, an “Offer in Compromise” is an IRS tax settlement. If you qualify for an offer, you can have your IRS tax debt greatly reduced. However, it’s not easy to qualify for an offer. The IRS will weigh your entire financial situation. If the IRS determines you don’t have enough income to satisfy your debt in full, your offer may be approved. It is your job to prove you can’t pay your IRS tax debt in full, so make sure you do your IRS research thoroughly.
Insider Tip: It’s notoriously hard to have your IRS tax settlement approved, regardless of “how simply or straight forward it may sound.” But there is a secret way to crack the IRS’s code. The IRS has three ways of determining if you qualify for an Offer in Compromise/IRS tax settlement.
The Factors: The IRS may accept the offer based on any of the following:
> Doubt as to Collectability: If you know you cannot pay your IRS tax debt in full, you may qualify. Remember, if you have assets that could be sold to satisfy your debt these must be considered when you make your offer to the IRS.
> Doubt as to Liability: If you think the debt liability does not fall to you, you’re a good candidate for an offer in compromise. But your reasons must be legitimate. Here are three legitimate reasons listed on the official IRS website:
(1) the examiner made a mistake interpreting the law
(2) the examiner failed to consider the taxpayer’s evidence or
(3) the taxpayer has new evidence.
IRS Tax Specialists: Expert IRS tax advisors may give you the edge you need to get your IRS tax settlement approved. Even with some insider knowledge, getting your Offer in Compromise approved by the IRS is difficult to achieve. That’s where IRS tax specialists come in. Tax specialists employ or include Tax Attorneys and Enrolled Agents. IRS tax specialists are experienced in all tax debt issues and know exactly what you qualify for, and how to help you get your Offer approved. They can make the difference in achieving an accepted offer.
It’s Just The Start of Your Road to Recovery: Getting your offer in compromise approved is only the beginning of your road to recovery. When your tax debt settlement is approved you are entering a 5 year contract with the IRS. This “contract” means you have to file your taxes on time for five consecutive years. If you default on a payment or fail to file properly and timely, the IRS can charge you the original tax debt amount plus penalties and interest.
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