Offer in Compromise

Offer In CompromiseIf your unpaid back taxes have accumulated to the point that you are unable to pay the IRS in full over a reasonable period of time, an Offer in Compromise may be your answer for IRS debt relief. The Offer in Compromise program allows you to reach an IRS debt settlement by paying your back taxes for less than the amount owed. Generally an Offer will be considered by the IRS if it is based upon your  “reasonable collection potential“,  which is the amount the IRS believes you’re actually able to pay.

The Offer in Compromise process begins when you submit your offer along with detailed information about your assets, income and expenses. The IRS will review and verify the information you provide before deciding whether to accept your Offer. The IRS may accept your offer or decide it is too low. If they believe you can pay more they will ask you to increase your offer amount.

When determining the reasonableness of your Offer, the IRS will consider how much equity you have in your home and other assets, plus the amount that you should be able to pay from your monthly income over a prescribed period of time. Generally, when calculating the amount of your monthly income that can be used to pay your back taxes, you are required to use national and local expense standards provided by the IRS rather than your actual living expenses  which may be higher than the standards. However, you may be allowed actual expenses if it is necessary for the health and welfare of your family or for the production of income.

Your Offer will not be considered unless all your tax return filing requirements are up to date and you have made all estimated tax payments for the current year.

Three Types of Offer in Compromise

You may submit an Offer in Compromise for one of the following reasons:

  • Doubt as to Collectibility – It is doubtful that you can ever fully repay the back taxes you owe.
  • Doubt as to Liability –  Doubt exists that the IRS has assessed the correct tax and therefore you do not owe the tax liability.
  • Effective Tax Administration – There is no doubt that you owe the taxes and have the ability to repay. However, special circumstances exist that would make it  unfair and create a financial hardship for you to pay the full amount of the taxes.

In 2013, only 34% of offers submitted were accepted. When you use the services of our experienced tax professionals, you greatly increase your chances of the IRS accepting your Offer in Compromise.

Paying For Your Offer in Compromise

When submitting an Offer in Compromise you must chose a payment option as well as sending an application fee and an initial offer payment. The initial payment and subsequent payments are determined by the amount of your Offer and which payment option you choose. East Coast Tax Consulting Group will counsel you on which payment option best fits your particular case.

After studying and analyzing all the facts, we’ll give you a straightforward recommendation as to whether you should submit an IRS Offer in Compromise or seek an alternative form of debt relief. Either way, your best chance for successful back tax resolution lies with our team of experts.

Learn More About Our Boca Raton Tax Relief Services

With over 30 years of experience, our tax professionals are here to help you obtain relief from your tax problems. Let our team of CPAs help settle your tax debt for the lowest amount permitted and solve IRS problems such as bank levyIRS auditswage garnishmentsunfiled tax returnsIRS liens and payroll tax penalties. We proudly serve Boca Raton residents in addition to the neighboring towns of Plantation and West Palm Beach. Schedule your Free Consultation today!