Tax Debt Resolution: Offer in Compromise

Last updated on May 23, 2022

Tax debt resolution often involves a partial payment of the tax debt amount. An Offer in Compromise is an IRS program where taxpayers can get their back taxes reduced. The amount that can be reduced under the plan depends upon the particulars of a taxpayer’s case.

Tax Debt Resolution: Eligibility Requirements for Offer in Compromise

It is important for taxpayers to understand that not everyone qualifies for this tax debt plan. Applying for an Offer in Compromise when a taxpayer clearly does not qualify can attract a penalty.

Only taxpayers who cannot afford to pay back their full tax debt may apply for this payment plan. Taxpayers are required to disclose all of their finances, including assets, bank and retirement accounts, stocks, and any other sources of income to the IRS. Therefore, it is vital they meet all eligibility requirements before applying.

Before applying for Offer in Compromise, taxpayers must make sure that they have paid all tax returns and are current with filing requirements and payments.

Other factors the IRS considers for accepting a request for an Offer in Compromise are:

• Ability to pay
• Income and expenses
• Asset equity

The IRS usually approves a request for the plan if the reduced amount is the most that they can expect to collect from a taxpayer within the Statute of Limitations.

Tax Debt Resolution: Using Tax Help

Taxpayers should use the assistance of tax professionals to help them choose and apply for a tax debt plan. An honest tax professional will assist taxpayers in studying, preparing, and negotiating a tax case before the IRS with the aim to achieve the best possible resolution.

Hiring a tax professional ensures smooth and stress-free resolution. It is immensely important to research resolution companies, especially if looking to resolve tax debt with an Offer in Compromise. Many fraudulent tax companies advertise the Offer in Compromise plan as a ‘pennies on the dollar’ settlement. They mislead taxpayers by using false claims to pocket large upfront fees. Our ratings and reviews of reliable tax services may help taxpayers in their search for a legitimate tax help.