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Tax Settlement | Offer in Compromise | Flat Fee Tax Service

Updated: Nov 22, 2019

Settle Your Back Taxes for a Fraction of What You Owe - Tax Settlement Evaluation Waiting! Stop IRS Collections Now.

It is true is that the IRS has a program that allows taxpayers to settle their tax debts for less than the amount they owe. The formal name for this tax debt settlement program is the IRS Offer in Compromise. The reason is simple: The IRS wants to do two (2) things. The IRS wants to collect as much money as they can and close cases. From the IRS perspective, most taxpayers can afford to pay their taxes with their current assets or over time or with a payment plan — so those people wouldn’t qualify for an Offer in Compromise (OIC). Most taxpayers pay their taxes on monthly payment plans.

The Offer in Compromise program is geared toward a narrow segment of taxpayers — people who will never be able to pay all of the debt with their future income or assets before the IRS runs out of time to collect it (generally, 10 years from the date the tax was assessed). For most people, there are IRS alternatives to the Offer in Compromise.


Most people file for a certain kind of Offer in Compromise - Tax Settlement There are actually three types of tax settlements (OIC). The most common one is called “Offer in compromise, Doubt as to Collectibility,” or OIC-DATC. This Offer in Compromise is appropriate for people who can’t pay their taxes after their living expenses are paid and want to settle for a payment that is less than the amount they owe.

For OIC-DATC, taxpayers will need to: — File a Form 656, Offer in Compromise. — Attach financial statements (Form 433A-OIC for individuals and Form 433B-OIC for businesses). — Submit supporting documentation to prove their asset values, liabilities, and monthly income and living expenses.

The two other types of OICs are: — “Doubt as to Liability,” when taxpayers don’t think they owe the tax in question. — “Effective Tax Administration,” which is reserved for taxpayers who can pay the tax they owe, but it would cause undue hardship, or there are other extenuating circumstances.

Taxpayers file few of the last two types of Offer in Compromise (OIC). Most people simply owe and can’t pay — so they need a Doubt as to Collectibility tax settlement (OIC).

It's math, not negotiation. It's about procedure.

The formula for an Offer in Compromise is simple: Can taxpayers pay the taxes they owe with their net equity in assets, plus any future disposable income (that could be paid monthly) before the collection statute of limitations expires? The IRS calls this “reasonable collection potential.”

Here’s a simple example to illustrate: — A taxpayer owes $25,000 on April 15, 2018, for a timely filed 2013 return (filed April 15, 2014) and submits an OIC application on that date. — The taxpayer has net equity in assets of $1,000 and monthly disposable income of $200. — The collection statute expiration date is April 15, 2024 (six years, or 72 months, remain on the collection statute).

Over 72 months, that $200 adds up to $14,400; add the $1,000 in net equity and you get a RCP of $15,400 – almost $10,000 less than the tax owed. This taxpayer would qualify.

The formula is straightforward. What’s difficult is determining asset values, assets to be included in a tax settlement, average monthly income, and regular necessary and allowable monthly living expenses. The IRS limits allowable living expenses, meaning the IRS will scrutinize and potentially limit a taxpayer’s actual expenses in a tax settlement application.

I am Dave Rosa. It is my duty, my responsibility and my pleasure to provide you with a thorough, comprehensive consultation.

95% of the clients I have spoken to have received a successful Offer in Compromise. After many years doing Offer in Compromise consultations, I know what questions to ask. It will only take up 20 to 30 minutes of your time. It could change your financial life. No matter what — if taxpayers believe they may want to apply for an Offer in Compromise (or need a better option), it’s best to engage a tax professional to help. The first step is to understand whether you will qualify to settle with the IRS. If you do — you need to figure out the amount you will have to pay to settle the tax bill.

An experienced tax professional can help taxpayers avoid pitfalls, set up the right collection option with the IRS, and ultimately save you a lot of grief and money, by evaluating all the alternatives in relation to your specific circumstances. FLAT FEE TAX SERVICE - 1-866-747-7435





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