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Offer In Compromise

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The Offer in Compromise Program - Allows Taxpayers To Settle IRS Tax Debt for Less Than The Total Amount Owed.

Freedom From Taxes - The Offer In Compromise

The Offer in Compromise is designed to allow a taxpayer to settle their debt for less than they owe to the IRS.  What many advertisements and TV ads talk about, however, is settling for “pennies on the dollar” and not that that a taxpayer must qualify in order for an offer to be accepted.  Because of this and the large number of unacceptable offers submitted to the IRS each year, only a very small fraction of the offers submitted, are actually accepted.  However, if you can qualify for a reduction in total tax debt, it can be a very sweet deal.

An Offer In Compromise Can Be Accepted When The Following Is Proven

  1. There Is A Doubt As To Collectibility. 
    This is where doubt that the taxpayer is able to pay the full amount of tax, during the statutory period for collection.
  2. There Is A Doubt As To Liability. 
    This is where doubt exists that the amount of tax the IRS believes is due is correct. 
  3. The Taxpayer Cannot Pay. 
    This is where there is not a doubt as to collectibility nor a doubt that the amount the IRS believes is due is correct but due to an economic hardship (that meets IRS requirements) the taxpayer cannot pay.

Basically, determining if you qualify is a calculation.  If the sum of a taxpayer’s assets, including IRA’s, 401k’s, cash value in life insurance policies etc. added to 48 times the amount of income, over and above the IRS allowable expenses is less than or equal to the offered amount, the offer will be accepted.  If the offer is less than this sum, the offer will not be accepted.  That is the bottom line. 

Hire An Experienced Attorney To Submit Your Offer In Compromise

Keep in mind, however, that even if all of the above lines up, if it is not presented in a way that the IRS may see that the calculations are correct, the offer will not be accepted.  This is where the skill of a tax attorney that specializes in solving IRS problems bears fruit.  Getting forms 433-A and/or 433-B filled out along with the Offer-in-Compromise IRS form 656 can be daunting even for a tax professional.  After all of the numbers are carefully categorized in the forms, they must be fully supported by the documentation submitted along with the offer. 

Other Solutions Are Available

Even if a taxpayer does not qualify to pay “pennies on the dollar” to resolve a tax debt, there are solutions to resolve IRS problems once and for all.  Discharging taxes through bankruptcy is a solution that can result in paying zero pennies on the dollar.  That right, if all of the requirements to make a tax dischargeable are present, a tax debt may be discharged completely and finally and owe nothing.  That is in addition to eliminating all of the credit card debt and other debts that often accompany tax debt at the same time.

Attorney Jim Gilland Is Experienced, Trustworthy and Authorized to Represent Clients In Court of Law If Needed
Utah State Bar
Member Since 06/14/1996
Member Utah Bar Association - Tax Attorney Jim Gilland
Gilland Law Firm, PC, Attorneys & Lawyers, Clearfield, UT
United States
Tax Court
Authorized To Represent Clients In US Tax Court
United States Court Of Appeals
For The 10th Circuit
Authorized To Represent Clients In US Court Of Appeals
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District of Utah
Authorized To Represent Clients In The US Circuit Court In Utah

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