The IRS Offer in Compromise
Many people don’t know that the IRS will, in some instances, negotiate a tax liability. Sometimes they will even settle on a surprisingly low total amount to finally settle a tax debt.
There are a few options for negotiating a tax debt down from the original amount, one of which is the IRS’s offer in compromise program. An IRS offer in compromise allows people who owe an unreasonable amount of debt to pay off their debt and finalize the total settlement at a lower amount than the full balance.
The Offer in Compromise program is meant to be an alternative solution to settling tax debts so that you have an opportunity for a fresh start. The program was established in order to ensure that taxpayers have payment options, particularly if they have an unfair or unlawful tax debt burden and are being forced into collections.
The offer in compromise program can be an extremely effective tool for settling your debt at a surprisingly low rate–even 20% or less than the original amount in some cases.
How does an offer in compromise work?
Typically, an Offer in Compromise action will work like this:
- We will work with the IRS to come to a mutual agreement that the tax debt is not payable through income or assets
- We will make an offer of a minimum amount the IRS is likely to accept
- The IRS will let us know whether it will accept this amount or not and will lower the total debt owing if it agrees
- When the amount offered is paid in full, all Federal tax liens will be released
Different types of offers in compromise.
Variations on these types of offers do exist. Each one of them is still called an “offer in compromise,” but each one is entirely different and has different criteria to qualify.
There are a number of rules that apply and, naturally, details matter. We advise clients on tax debt remedies such Offer in Compromises daily. Please contact us immediately if you have an unpaid tax debt and would like to consider whether an Offer in Compromise might be an appropriate solution.
When would the IRS consider an offer in compromise?
To be considered for an offer in compromise, you must prove that you cannot pay the debt and that it would be unfair for the IRS to push you to do so.
Some of the reasons that the IRS would issue an offer in compromise include:
- If there is reason to believe that the total amount of the debt is not correct
- If there is doubt that the person who should pay the debt will be able to pay the debt based on their overall debt, asset and income amounts
- If there are other exceptional circumstances that would impinge on your ability to pay the debt in due time
See if you qualify today!
Having an experienced tax professional on your side to help you through the process of submitting and negotiating the offer can increase the chances that the offer is not only accepted but one that results in you paying the absolute minimum amount required to take advantage of the IRS offer in compromise program.
We are former IRS attorneys, appeals officers, and auditors who help taxpayers prepare and submit offers in compromise. We offer compassionate, individualized service at manageable rates.
If you are in a situation where you cannot pay your debt owing, call today for a confidential consultation. Our number is 800-521-0230.
More About IRS Settlements
- IRS Ignore Your Offer in Compromise? What’s Next?The IRS offer in compromise program provides taxpayers with a remedy for settling back taxes. It can provide taxpayers with a much-needed fresh start. Congress has changed the rules for offers. One change is that offers are deemed accepted if the IRS does not reject them within two years. This raises the question of how you get the IRS to recognize an offer in compromise that is deemed to be accepted. The court addresses this in RAJMP, Inc. v. United States, No. 19-cv-876 AJB (WVG) (S.D. Cal. 2020). Facts & Procedural History The taxpayer owed the IRS $8 million in… Continue reading IRS Ignore Your Offer in Compromise? What’s Next?
- Settling Unpaid Taxes With Sporadic or Seasonal IncomeSporadic or seasonal income can make it difficult to settle back taxes with the IRS. For example, if you have a large one-time payment that is not likely to continue, can the IRS consider this in evaluating how much you can pay the IRS? The court addresses this in Margolis-Sellers v. Commissioner, T.C. Memo. 2019-165 in the context of alimony payments that would no longer be received. Facts Procedural History The taxpayer is self-employed as a movie producer. Her ex-husband is also a movie producer. He paid her alimony of $11,000 per month from 2012 until June 30, 2015. The… Continue reading Settling Unpaid Taxes With Sporadic or Seasonal Income
- Setting Off a Non-Tax Debt Owed by the IRSIf you owe back taxes but the Federal government owes you for some other matter, can the IRS offset the unpaid taxes with the amount the government owes you? The answer is more complex than one would think. The court addresses this in Tartt v. Commissioner, T.C. Memo. 2019-112. Facts & Procedural History The taxpayer filed a lawsuit against a hospital and medical clinic for employment discrimination. The trial court dismissed the claims. On appeal to the Seventh Circuit, the taxpayer complained that the U.S. government had joined in a conspiracy to deprive him of employment benefits. The taxpayer filed… Continue reading Setting Off a Non-Tax Debt Owed by the IRS