If you are struggling with a tax debt that you cannot realistically repay, an offer in compromise may provide a workable solution, and a tax attorney can help you file this application. An offer in compromise allows you ask the IRS to accept settlement for less than the full amount that you owe. In certain circumstances, this is a better solution for the IRS because they will get at least a partial payment, so they are willing to agree to the offer.
The IRS will look at many factors when considering your application, including your ability to pay, your current expenses and income and any assets you have that could be liquidated to pay the bill. If, in light of these facts, it is obvious that you cannot pay what is required, then an offer in compromise may be accepted. The IRS does require you to explore other payment options first.
With an offer in compromise, you will have to make a payment. This can either be a lump sum cash payment or a periodic payment. With a lump sum cash payment, you will submit a payment for 20 percent of the amount that you owe along with the offer in compromise application. If your offer is accepted, you will pay off the remainder of your offer balance in up to five payments.
If you choose periodic payment, you will determine how much you can afford to pay monthly, and send that amount along with your application. Continue making this monthly payment until you hear about the approval of your application. If approved, continue making the monthly payment until your offer balance is paid off.
The paperwork to file an offer in compromise is quite complicated, and a mistake could cost you the ability to file. Working with a tax attorney can minimize this risk. A tax attorney can look at your overall income, expenses and assets to determine if this is the right option for you. If it is, your attorney will help you file the necessary paperwork. If you don’t qualify, an attorney can help you determine what other programs or solutions are available to help you deal with that looming tax bill. To protect your assets and improve your chances of approval, contact a tax attorney before starting an offer in compromise.