What is an Offer in Compromise?
Each year, millions of Americans fall behind on their tax obligations for many different reasons. Many people owe the IRS so much that they feel they will never be able to pay the taxes that they owe. If this sounds like you, then the Offer in Compromise may be right for you. The Offer in Compromise is a program that allows you to settle your debt for less than what you owe.
Why would the IRS and certain States do this?
Because the IRS places a greater emphasis on current compliance than on past compliance. They would rather ensure that you are a good taxpayer from this point forward than destroy your life because of some past mistakes. They are willing to forgive your old debt in exchange for future compliance. Congress created the Offer in Compromise program so that you have a chance for a fresh start.
What Amount Can I Settle For?
To have an Offer in Compromise accepted, you must convince the IRS that the amount that you are offering them is as much or more than they can ever hope to collect from you on your tax bill. This means that you cannot just pick a number and offer it to the IRS. The amount that the IRS will accept on an Offer in Compromise is based upon a calculation of future income and assets.
You are trying to convince the IRS that the amount that you are offering is the most that they could ever hope to collect from you.
How to Qualify
- You owe the Internal Revenue Service money that is eligible to be compromised.
- You have filed all tax returns required by the Internal Revenue Service.
- You are current with your present tax requirements. Current means that you are on track for the present year — that you will not owe taxes again this year
- The amount of your offer is something that is below your tax liability, is verifiable, and you can afford it within the terms of the agreement.