If you have significant tax liabilities, you may have heard the IRS reference an offer in compromise to settle your debt. But what does this mean? An offer in compromise will allow the taxpayer to settle their tax debt for less than what is owed. The IRS enters these agreements somewhat regularly with tax payers that have significant tax liabilities. There are certain other qualifications that you must meet as well.
An experienced tax professional can help you work out an offer in compromise with the IRS. You will need a great deal of information to even get started with this process, and the tax preparers at The Accounting & Tax Company in Hallandale Beach, Florida can help.
An offer in compromise is only available to certain taxpayers. In general, if you cannot pay your full tax liability or if paying it would create a serious financial hardship, then the IRS may be able to offer you a settlement option where you pay less than what you owe on your taxes. They will look specifically at your:
Usually, if the offer is the amount that the IRS could reasonably expect to collect within a period of time, then they will accept the offer in compromise. There are other options that you may want to consider first, such as payment plans or an extension. An offer in compromise is not something everyone is qualified to do, or should do. Speak with your tax professional for more specific information for your unique situation.
If you owe back taxes, you cannot qualify for an offer in compromise. Those who can take advantage of this program must be fully caught up on any back tax obligations. That includes both filing and paying any outstanding tax obligations. You also cannot use an offer in compromise if you are going to file bankruptcy in the very near future. For those that are employees, you must have also submitted all of your required federal tax deposits as well.
While an offer in compromise may seems like a good deal, there are a few things that you need to keep in mind when considering whether this is the right option for you.
It is important to note that if you can pay your obligation in full, then you should do that. The IRS will not accept your application if you can pay in full, and you will waste the $186.00 application fee in the process.
Your offer packet will include information on your income, assets, expenses, and how you would like to pay in your offer. There are two payment options.
If you earn under a certain amount of money, however, you will not need to make some of these payments. Your tax preparer can help you with this very specific information.
If your offer is not accepted, then you can also appeal within 30 days of the rejection. The offer in compromise process can be daunting. Use a professional tax service like The Accounting & Tax Company to help you with this process. Call 954-457-0699 or use the Contact button below to get started.