Offer in Compromise: What You Need to Know

Many people owe back taxes but simply don’t have the income to pay them off. However, many options exist for paying back taxes without becoming financially constrained. One option is an offer in compromise. Discover what to know about this specific tax resolution option.

What Is an Offer in Compromise?

An offer in compromise is a tax resolution option that allows accepted applicants to pay back their back taxes for a lower amount. It involves several forms, an application fee, and a first payment. If the IRS accepts your offer, then you either pay off your debt within a few months or a full year.

Who Is Eligible for an Offer in Compromise?

Considering that the IRS rejects many offers in compromise, eligibility is a major factor to research before you submit your offer in compromise. Generally, you have to meet a few requirements before you apply:

You’re current on the current year’s taxes or have an extension.
You’ve filed all tax returns.
You don’t have an open bankruptcy or IRS audit.
You haven’t filed for an innocent spouse claim.
You must have financial hardship that disables you from paying the IRS.

If the IRS determines that any of these factors make you ineligible, they will usually reject your offer in compromise.

Why Does the IRS Accept an Offer in Compromise?

The IRS will often accept your offer in compromise if they determine you can’t pay your tax debt in full. To do this, they will look into various factors like income, assets, and household expenses. For example, they might look at your property value, life insurance, mortgage, household good costs, student loans, or childcare costs. If these impede your ability to pay your back taxes, they might accept your offer and help you set up a payment plan.

What Types of Offers in Compromise Are Available?

While the basic concept of an offer in compromise is the same, you have a few options to choose from. One that many people apply for is a Doubt as to Collectability. This means that you simply don’t have the income to pay your entire tax debt completely.

You might also consider a Fair Tax Administration. This means that you might be able to pay off your taxes fully, but the IRS figures out that your current offer is fair and acceptable.

Finally, you might apply for a Doubt as to Liability. This option really only applies for those who don’t think they owe the full tax debt. In this case, if the IRS accepts this, they will simply determine you don’t owe it at all. You don’t have to pay that portion.

How Can a Tax Specialist Help With Your Offer in Compromise?

While you can always choose to submit an offer in compromise yourself, your chances of acceptable increase greatly when you turn to a tax specialist. A tax specialist can help you prepare the offer in compromise by ensuring you have all the required paperwork and that each form is filled out correctly and fully. Additionally, they can advise you on what offer in compromise to pursue and whether you’re eligible.

Why Choose IRS Trouble Solvers?

Our experienced team of tax specialists and attorneys will help resolve your tax debt issues. We will be happy to answer any questions about offers in compromise and ensure you have all the right elements for a better chance of acceptance.

When you owe back taxes, look nowhere else but IRS Trouble Solvers. We offer over 30 years of experience and have a proven track record of success. Contact us today to start your tax resolution journey.