Offer in Compromise

Do you owe money to the IRS? It can be a scary situation to be in. There are a number of different reasons that you may fall into debt with the IRS. Perhaps you missed the tax deadline, and hoped the IRS wouldn’t notice. Or, you filed incorrectly, and failed to correct your mistake. Maybe, come tax season, you found that you were unable to pay the amount of taxes you owed, and weren’t sure what to do.

No matter what the reason is that you’ve fallen into tax debt, it’s important to know that all hope is not lost. The IRS offers many solutions to help Americans get on top of their tax debt. This may include solutions such as an IRS installment agreement, where you work with the IRS to craft a plan to pay back your debt in installments over an extended period of time.

One tax debt solution that helps thousands of taxpayers each year is an IRS Offer in Compromise. An Offer in compromise is a solution that allows taxpayers to negotiate with the IRS to settle their tax debt for an amount that is less than the total amount old. That leaves you paying less than you owe, and puts you back in the IRS’s good graces.

Say that you owe $50,000 in back taxes, fees, penalties, and interest. This is a hard pill to swallow because, between your bank account and your assets, you don’t have $50,000. You’ve explored IRS installment agreements, but you can’t find a way to make it work for you. Even over the course of 3 years, you won’t be able to pay the total and still meet your basic needs. This makes you a good candidate for an Offer in Compromise.

You contact the IRS and plead your case. You show proof of your assets and income, and you both agree that paying the total amount you owe will cause extreme economic hardship. Through negotiations, you offer to pay $15,000 to settle your $50,000 debt. The IRS agrees. You’ve made an Offer in Compromise!.

The tricky thing about an IRS Offer in Compromise is that, as a taxpayer, you have no legal right to settle your debt for any less than you owe. The only legal requirement is that you pay your tax debt; the rest is up to the IRS’s discretion. This means that, when it comes to your Offer in Compromise, it’s imperative that you have a killer argument as to why you should be able to settle for less. For this reason, it’s always recommended that you work with a tax professional when pursuing an Offer in Compromise. A professional can help you build a bulletproof argument, ensure that you have all of the documentation and proof that you need, and can manage the negotiation process. In the end, you’ll pay less than you owe, and your slate may be wiped clean.