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Offers in Compromise | What Will the IRS Usually Settle For | Flat Fee Tax Service

Updated: Jul 5, 2019

Offers in Compromise - Tax Settlement - What Will the IRS Settle for? Per IRS statistics, in 2017, the IRS accepted approx. 40% of the the 80,000 (or so) Offers in Compromise submissions. The average offer in compromise accepted in 2017 was about $7,585.

What you want to know is this: “how much will the IRS settle for in my case?” Not some hypothetical average. The tax professionals at Flat Fee Tax Service, Inc. can determine a taxpayers approximate tax settlement during our initial consultation. Our article will look into how the IRS determines eligibility for an Offer in Compromise (#OfferinCompromise) and how it calculates the minimum offer it can accept.

What is an Offer in Compromise? An Offer in Compromise is a powerful tax settlement designed to reduce the tax liability of taxpayers who live "paycheck to paycheck".

When used correctly it can save you many thousands of dollars. Not everyone with tax debt is qualified and eligible for a tax settlement.

Basically, an Offer in Compromise is a tax settlement or agreement between you and the IRS. Offer in Compromise is not a "haggle". If the IRS can be convinced that after paying your "allowable expenses", you can’t afford to pay your entire tax debt, the IRS will settle.

Will the IRS will approve my Offer in Compromise? The Tax Professionals at Flat Fee Tax Service, Inc. have an acceptance rates of 90% and higher. This is because our IRS Tax Attorneys (#IRSTaxAttorneys) (only submit applications when they know the taxpayer meets the requirements and they know the IRS has to say yes. Using our tax professionals could help you save time and money on pointless applications. THIS IS WHAT THE IRS CONSIDERS: CASH FLOW - First, the IRS will determine how much you can afford to pay every month if you were to arrange a standard installment agreement. To calculate this the IRS wants your pay stubs or a recent profit and loss statement if you own a business.

The IRS then needs to know the dollar amount of your allowable living expenses. These are basic monthly expenses, such as housing, utilities, car (non-luxury) payments, clothing, and food. The IRS may require you to limit your living expenses to levels it considers “reasonable.”

The IRS then subtracts your allowable living expenses to your income to see how much you could afford to pay every month. This amount will be used to determine the offer in compromise.


Please Note: This financial formula is also a part of being Currently not Collectible. ASSET VALUATION - Second, the IRS estimates the value of your assets. This includes your car, house, retirement plan, jewelry, and other valuables. How is your stuff valued? First the IRS deducts any loans or mortgages you have on each asset and reduces its value by 20%.

Should you "do it yourself" (DIY) or hire a tax professional and IRS Tax Attorney? Taxpayers who try to DIY, you have a 30% chance of approval. If you owe less than $5,000, you probably should try to negotiate with the IRS directly and get yourself into Currently not Collectible status as $10,000 is the minimum for an Offer. Although tax relief firms are valuable assets to have on your side when negotiating a tax settlement with the IRS, their fees can be exuberant and outweigh the savings they generate when dealing with small tax debts. Do not pay more than what is necessary. FEAR NOT, FLAT FEE TAX SERVICE, INC. PROVIDES TAXPAYERS WITH VERY AFFORDABLE FLAT FEES FOR THEIR TAX SETTLEMENTS.


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