IRS Tax Relief

What is an Offer in Compromise?

An Offer in Compromise is one of the most effective tax legal devices available to you today. The Offer in Compromise program allows you to settle your entire back tax liability with the IRS for just pennies on the dollar. You have the legal right to file an Offer in Compromise with the IRS and resolve your tax matter for substantially less money than what you owe. The IRS is encouraging taxpayers with tax problems to submit Offers in Compromise. Federal tax law has allowed the IRS to settle tax liabilities for less than the total due for nearly 40 years. However, it was not until recently that the Internal Revenue Service started accepting Offers in Compromise on a routine basis. The average offer price accepted by the IRS is 13 cents on the dollar. That means if you owe $10,000.00, the average offer amount that you will have to pay the IRS to settle your entire back tax liability is only $1,300.00. It is advisable to consult a competent and qualified tax attorney for your IRS back tax problem.

Over twenty five million taxpayers owe the IRS over two hundred billion dollars. One reason why the IRS established the Offer in Compromise program is because the IRS knows that they will never collect two hundred billion dollars from delinquent taxpayers. The IRS would rather collect some money from delinquent taxpayers than no money at all. This is great news for you because you now have the opportunity to settle your entire tax bill for just pennies on the dollar. Imagine how the quality of your life will improve when your entire tax bill is settled for substantially less money than what you owe.

What Taxes Can I Settle?

Do you owe the IRS money for more than one type of tax? Do not panic because you have the legal right to settle all of the following types of taxes for less money than what you owe: Personal/Individual income tax; Payroll/Employment tax; Unemployment tax; Capital gains tax; Estate and Gift tax; Inheritance tax; Corporate tax; Partnership tax; Penalty assessments; Civil Penalty assessments; Interest assessments; and, Trust Fund Recovery assessments. You have the legal right to list and settle all of your tax liabilities on your Offer in Compromise. You do not need to file a separate Offer for each tax liability that you want settled with the IRS. Any person or organization that has a federal tax liability can submit an Offer in Compromise.

How Do I Qualify For An Offer in Compromise?

If you have a tax problem with the IRS you need to exercise your legal rights and submit an Offer in Compromise. It does not matter how much money you owe the IRS. Instead, what matters is your financial ability to pay your tax bill. You must prove two things to the IRS before they will accept your Offer in Compromise. If you can prove that your asset value is low or nominal and your monthly allowable expenses equal or exceed your monthly income, then you may qualify for a reduced settlement with the IRS.

You must determine your asset value before you submit an Offer in Compromise. The IRS will not accept an Offer in Compromise for an amount less than your total equity value. The equity you have in an asset is the value of the asset minus the liability you owe on the asset.

You need to determine whether your monthly allowable expenses equal or exceed your monthly income. If your monthly allowable expenses equal or exceed your monthly income, and your asset value is low or nominal, you must submit an Offer in Compromise. An experienced tax attorney can help you determine if you qualify for an Offer in Compromise. According to the IRS, you cannot use all of your monthly expenses when you determine if your monthly expenses equal or exceed your monthly income. The IRS will only allow you to consider allowable monthly expenses. What is an allowable monthly expense? The IRS divides monthly allowable expenses into necessary expenses and conditional expenses. The IRS has established monetary limits on some allowable expenses. As a result, you will not be allowed to claim the entire amount you actually spend on certain allowable expenses. When you are calculating whether your monthly allowable expenses equal or exceed your monthly income, you must be sure that your actual expenses do not exceed the IRS monetary limits for that expense.

Do I Need To File All Of My Tax Returns?

The IRS is extremely demanding when it comes to filing all of your federal tax returns. In fact, the IRS will probably not accept your Offer in Compromise unless all of your federal tax returns have been filed. The IRS agent who will handle your Offer in Compromise will check your IRS files to determine if you have filed all of your federal tax returns. The IRS will not accept your Offer in Compromise if you are not current and have failed to file all of your federal tax returns. Being current and having all of your federal tax returns filed is critical to having your Offer in Compromise accepted.

Will The IRS Withhold Collection Action?

The IRS will usually stop collection activity against you after you submit your Offer in Compromise. According to the IRS, all collection activity must be stopped if the IRS believes that you submitted your Offer in Compromise in good faith. What is good faith? Good faith means that you submitted your Offer in Compromise for the purpose of settling your back taxes and not for the purpose of stopping IRS collection activity. However, in many instances the IRS illegally continues to enforced collections against a taxpayer after the Offer in Compromise has been submitted. An experienced tax attorney will be able to help you release all collection action by the IRS.

What Happens After My Offer in Compromise is Accepted?
When your offer is accepted, the Internal Revenue Service will ask you to pay the reduced amount suggested in your offer. After you have paid the offered amount, the Internal Revenue Service will likely release any liens against you on your property.