Offers In Compromise
Offers-In-Compromise
I receive a few calls every week, regarding the possibility of settling IRS debt for, "pennies on the dollar", something undoubtedly heard on television and/or radio. This is a catch-phrase spoken by many so-called tax settlement companies, and it refers to the IRS's procedure for allowing some taxpayers to resolve their tax debt issues for less than they currently owe.
While it is true that there is such a procedure, the reality is that it is extremely difficult to qualify for this and have it accepted by the IRS. However, in the right circumstances, it can be a great way to put your tax problems behind you.
When the IRS reviews such a request, called an "Offer-In-Compromise", they look at a number of factors such as age, health, current income, future earning potential, and the cause(s) of the debt. And, an offer will only be accepted if the IRS is confident that it represents a collection of more than they will be able to collect if they don't accept it. In fact, the IRS claims that roughly 35% of all offers are actually accepted. I feel it may be significantly lower than that.
If you feel that you are in a situation which will never enable you to completely pay-off your tax debt to the IRS, an Offer-In-Compromise is certainly worth considering. But, be aware that there a number of companies out there who will tell you that they can get an offer accepted for you, without knowing anything specific about your current financial situation. It takes more than a short conversation with you to make such a determination. And, at least one such company has been sued numerous times in various states and in a national class-action lawsuit, for making such claims without any basis. The result is that penalties and interest continue to accrue, and nothing has been done to resolve the problem.
If you think you might qualify for an Offer-In-Compromise, you may be right. But, remember that there are some companies who will tell you what you want to hear in order to get your money. That only creates bigger problems.
Topics
Hardship/Currently-Not-Collectible Status
Hiring an IRS Representative
Innocent Spouse Relief
Installment Agreements
Liens and Levies
Offers In Compromise
Payroll Taxes and the Trust Fund Penalty (TFP)
Payroll Withholding Taxes
Substitute for Return (SFR)
Recent Updates
December 21, 2007
Payroll Taxes and the Trust Fund Penalty (TFP)
December 20, 2007
Substitute for Return (SFR)
