Chances are, you have heard the claims that your federal taxes can be settled for “pennies on the dollar” Sounds too good to be true, right? Although many of the companies advertising these claims are a scam, the IRS does have the authority to settle, or “compromise,” on tax debts, accepting less than the full amount owed. This settlement type is called Offers in Compromise, and it is just one of a few different options. While only a select group of taxpayer’s qualify for this program, with the tough economic times we’ve all been through the past several years, the chances of qualifying are better than ever. If you can answer yes to any of the three questions below, it’s worth getting expert advice on how to make an Offer in Compromise.
Is your home underwater and your income less than your expenses? We’ve all seen our home’s value drop dramatically during this economic recession. It is possible you have negative equity or maybe you’ve lost your home altogether. Perhaps you lost your job as well, or are making far less than you were in the past. With more people in these types of situations than ever before, the IRS figures they will not be able to collect the full amount owed by you. That makes you a good candidate to make an Offer in Compromise.
Is it possible the government is wrong? Mistakes do happen. IRS examiners work under tremendous pressure. Perhaps yours misinterpreted the law, or maybe the examiner got the law right, but got the facts wrong. Maybe you have new evidence that would have affected the calculation of your tax liability. It makes sense to have an independent third party examine your records to determine if the IRS might doubt the accuracy of your tax liability and thus accept an Offer in Compromise.
Is the tax correct, but unfair? The IRS has the authority to reduce tax debt when collecting it would create economic hardship, or simply be unreasonable. The IRS gives an example of a couple with assets to satisfy their tax debts, but with an ill child requiring long term care. The couple’s assets and income are necessary to provide for the child. An Offer in Compromise is a legitimate consideration.
An Offer in Compromise is a negotiation. The taxpayer makes an offer, including a lump sum payment or payments over time. The IRS might accept the offer, reject it, or make a counter offer.
Contact one of our licensed tax experts at Professional Tax Resolution to find out if you qualify for an offer in compromise, or one of the other settlement options and see what we can do for you.