Offer in Compromise
a/k/a"Offer and Compromise"
Tax Settlement - Settle with the IRS for Less
Here's What We Can Do For You
The IRS has a tax settlement program called an Offer in Compromise.
Often times taxpayers will use the term "Offer and Compromise"
when researching "IRS tax settlement".
What is "Offer and Compromise"?
An "Offer and Compromise" (OIC) is
the ultimate tax settlement offered by the
IRS that allows a taxpayer to settle their
tax debt for far less then what is actually owed.
This tax relief option is great for a taxpayer
because it gives them a fresh start with the
IRS, but the ultimate goal of an Offer in Compromise (IRS settlement) is to come to a legal agreement for payment that’s in the best interest of both the taxpayer and the IRS.
The three grounds for submitting Offers in Compromise are a doubt as to collectibility, doubt as to liability, and effective tax administration. We’ll discuss these in more detail in a moment, but here are the basic definitions and differences:
Doubt as to collectibility is when the taxpayer is financially unable to pay their full tax debt.
Doubt as to liability is when the tax debt has been assessed in error or the amount of debt assessed is incorrect.
Effective tax administration is when the taxpayer is able to pay their debt but paying the full amount would either cause financial hardship or would be considered unfair because of exceptional circumstances.
Would an Offer and Compromise
Be the Right IRS Option for Our Client?
The IRS created the Offer in Compromise (tax settlement) because many taxpayers cannot pay their tax liability without causing themselves financial hardship. In 2016 alone, the IRS accepted 27,000 offers, amounting to $225.9 million. The IRS also rejected 36,000 Offer and Compromise submissions.
THAT'S A 42% OFFER AND COMPROMISE APPROVAL RATE.
FLAT FEE TAX SERVICE CLIENTS
HAVE SAVED, ON AVERAGE, 96% OF THEIR TAX DEBT AND HAVE
A 95% RECORD OF SUCCESSFUL IRS SETTLEMENT AGREEMENTS.
FLAT FEE TAX SERVICE HAS THE HIGHEST OFFER IN COMPROMISE
SUCCESS RATE NATIONWIDE.
So how do we know if an Offer and Compromise would be right for your client? EXPERIENCE. THAT'S HOW.
The IRS does not allow anyone to "guarantee" the outcome of a tax settlement. A tax professional needs a lot of experience. If you want to get your tax settlement accepted by the IRS, our Tax Attorneys must demonstrate that our client cannot pay the full tax debt owed, that the tax is not actually owed, or that another unique situation applies where an offer is in the best interest of both our client and the IRS (see IRM 22.214.171.124). As a general rule, the IRS is likely to approve settlement agreements when they represent the most money the IRS can expect to collect within a reasonable time period.
An "Offer and Compromise" (OIC) is your ultimate tax relief option. If you are "eligible and qualified" for an Offer and Compromise (IRS tax settlement) this is what it will do for you. It will "wipe out" nearly all of your tax debt as the IRS never accepts zero dollars. The IRS will accept $100 but never zero dollars.
The first thing to look at when evaluating whether or not you are a good fit for an Offer and Compromise (OIC) is the eligibility requirements.
In order to be eligible for an Offer and Compromise, you must:
Have filed your tax returns (last 6 years)
Have received a bill for at least one tax debt included in your Offer and Compromise (IRS tax settlement)
Make all required estimated tax payments for the current year
Make all required federal tax deposits for the current quarter (if they are a business owner with employees)
Beyond eligibility, the IRS will consider the following when determining your financial hardship:
Allowable Expenses (rent or mortgage, car payment(s), utilities, health insurance)
WHY YOU SHOULD HAVE AN IRS TAX ATTORNEY FOR YOUR
OFFER AND COMPROMISE.
Keep in mind, while certain qualifications and requirements are set in stone, the IRS Revenue Officer reviewing your tax settlement will look take into account all aspects of your situation. Your lifestyle will play a huge factor in whether or not the IRS Examiner approves your Offer and Compromise (OIC) or not.
If you claim that you can’t pay the full tax debt and you drive a brand new Range Rover and own a $2 million house that has equity, the IRS will rule that you are not a good candidate for a Doubt as to Collectability type of Offer and Compromise.
The IRS collects most of their information about your client’s financial situation using IRS Form 433-A, but the rest of the information is gathered through investigation.
If our IRS Tax Attorneys are able to justify a client’s abnormally high cost of living due to special circumstances, the IRS examining officer will take that into consideration (usually via effective tax administration).
Just because our client has equity in their house or vehicle doesn’t necessarily mean the IRS expects them to sell those things to pay their debt.
Keep in mind in regard to your ability to pay: while an Offer in Compromise (settle IRS debt) is being reviewed (a process that can last 10 to 12 months), your income and assets will be under ongoing review to make sure that at no point can you pay the tax debt.
Who Will Not Qualify for Offer and Compromise?
Many taxpayers will want to try for an Offer in Compromise (IRS tax debt settlement) because of how significantly it can decrease the amount of tax debt they owe. However, not everyone is eligible, even if they have a large amount of debt.
The IRS will not accept an Offer and Compromise for a taxpayer who:
Has unfiled tax returns
Has a history of not paying their taxes
Has deliberately avoided tax payment
Is a tax protester
The taxpayer is in an open bankruptcy proceeding (or has a business in an open bankruptcy proceeding)
Has had their tax liabilities in question referred to the Department of Justice
There are financial questions that need to be laid out there for examination. The IRS will start with gross monthly income. If you are married, it is combined income even if your spouse is not liable for your tax debt.
From your gross monthly income, you start deducting what the IRS calls "allowable expenses". What you may ask are allowable expenses? The IRS "gives" you expenses such as rent or mortgage, car payments, car allowance, utilities, food and clothing, health insurance, alimony, child support, etc.
Your assets are also factored in. Assets such as equity in properties, stocks, bonds, 401K's, IRA's are all a part of the equation.
It is the opinion of our tax professionals that you have an experienced IRS Tax Lawyer handle your IRS Offer and Compromise submission. Should you take our advice, your chances of receiving a successful OIC (IRS settlement) will be greatly enhanced. But, it is your choice as to how you want to proceed.
These are some stats that you may want to consider. In 2016 per the IRS, the IRS approved approximately 42% of all Offer and Compromise submissions. Should you do your own OIC, you have approximately a 30% chance of success.
OUR CLIENTS HAVE HAD A 96% IRS SETTLEMENT SUCCESS RATE. WHY IS THAT YOU MAY ASK? WELL, IT'S EASY, WE DON'T LIE TO OUR CLIENTS. IF YOU AREN'T QUALIFIED, WE WILL TELL YOU TELL YOU THE TRUTH.
IF YOU'RE ARE ELIGIBLE FOR A TAX SETTLEMENT,
WE ARE THE TAX PROFESSIONALS FOR YOU.
JOIN OUR LIST OF SUCCESSFUL
OFFERS IN COMPROMISE CLIENTS.
IT'S TIME TO "HIT A BULLSEYE".
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