Offer in Compromise IRS | How to Settle IRS Tax Debt | Flat Fee Tax Service | San Diego
Updated: Jul 22
Offer in Compromise: How to Settle IRS Debt
The IRS wants to do two (2) things: Collect money and close a file. Accepting a well crafted Offer in Compromise will accomplish both of those IRS goals.
The IRS is willing to work with taxpayers who have fallen behind on their tax debt if it is proven to the agency that you are eligible for a tax settlement. Find out what the qualifying standards are for the “offer in compromise” program.
An “Offer in Compromise” is a little-understood but remarkably effective way that thousands of people in trouble with the IRS routinely eliminate tens of thousands of dollars in tax debts. It is a federal program that allows you to settle a tax debt for much less than the full amount you owe. You do not need to be "destitute" to qualify for an IRS settlement.
Here’s how an Offer in Compromise works: The IRS is breathing down your neck for a tax debt in excess of $10,000 in back taxes. You don’t have the money to pay the IRS after calculating your allowable expenses and what your future income may be.
The agency can easily garnish your wages, levy your bank account(s), or take your house. An Offer in Compromise (#OfferinCompromise) will stop the IRS from taking your assets.
What is the Offer in Compromise Acceptance Rate?
People of all ages and incomes are waking up to the power of an Offer in Compromise (OIC). The IRS accepts approximately 42% of the 80,000 Offers in Compromise received year in and year out.
THE TAX PROFESSIONALS AT FLAT FEE TAX SERVICE HAS BEEN ACHIEVING A 96% OIC APPROVAL RATE.
To determine whether you can pay he tax debt, as well as how much you may be able to pay, the IRS generally looks at these four components:
1. Your ability to pay
2. Your income
3. Your expenses
4. Your assets
5. Future income
6. The IRS Statute of Limitations
The IRS will not consider your tax settlement if any of the following are true:
3. You have not made required estimated tax payments.
4. You are self-employed, have employees and have not submitted required federal tax deposits.
The IRS says the Offer in Compromise program is not for everyone. The agency suggests that taxpayers “explore all other payment options before submitting an offer in compromise.”
Here are signs you are a good candidate:
1. You are a retiree on a fixed income.
2. You are in legal trouble with the IRS. They're often looking to settle tax debt instead of getting bogged down in a lawsuit.
3. You're facing possible bankruptcy, but in fact your major problem is unpaid taxes.
4. You can't pay your full tax liability, or doing so creates a financial hardship
5. You meet federal low-income guidelines that aren’t so low these days: under $51,950 for a family of three, under $73,550 for a family of five, and so on.
What is the Minimum Offer Amount on an OIC?
Many of our clients have paid as little as $100. Many more have paid a grand total of $500. Obviously, you’ll want to offer as little as possible. Of course, it’s not that simple. How small of an offer the IRS will accept will depend on your financial condition, and you will need to reveal that in great detail on Form 433-A (for wage-earners and the self-employed) or 433-B (for businesses).
Consider Hiring an Attorney
You can file on your own Offer in Compromise, but our team does not recommend it. The number one reason for a Offer in Compromise rejection is paperwork errors. The IRS will look over your OIC with a "fine tooth comb" looking for a reason to send the application back. The IRS calls the rejection "un-processable." Yes, there will be a fee for getting you out of trouble. The key is to not not over-pay for the service while getting the right resolution.
The tax professionals at Flat Fee Tax Service (Flat Fee Tax Relief) provide valuable IRS tax debt help at a very affordable fee. Our teams are located in San Diego, California, and Clearwater, Florida. Give our team a call and find out if you should be seriously looking at settling your tax debt.
FLAT FEE TAX SERVICE - FLAT FEE TAX RELIEF