Offer in Compromise is a topic we hear a lot of questions about from clients and a topic that can definitely help a lot of people read more about one such client question and our Answer:
Question: I’ve heard tax professionals mention it before: Offer in Compromise. But I really can’t believe it. You can really reduce your tax debt to the IRS through an offer? I currently owe $100,000 in back taxes. Is this something that could work for me?
Answer: Let me first address your question about an Offer in Compromise. Yes, believe it or not, it is possible to reduce your debt to the IRS substantially through a negotiation process. In fact, it’s possible to reduce your debt dramatically.
After years of chasing broke taxpayers, the IRS has learned that aggressive, knock-on-your-door methods aren’t the most effective. In reality, offering incentives for taxpayers to fess up and come clean have proven to be the best method of collection.
Here’s how it works: Once a qualified tax professional analyzes your previous returns, making sure that you are not claiming to owe the IRS any more than you should, you and your tax professional will present an IRS agent with an offer — often merely a percentage of what you owe. Sometimes the agent will accept the offer; other times he’ll make a counter. Generally, in the end, you’ll find that your IRS debt has been reduced substantially. I should emphasize the need for a qualified tax professional in this process. Negotiating with the IRS is a complicated dance, and you need to make sure you’re working with someone who knows how to deal with the government.
Now for your second question: do you qualify. That’s difficult to answer without a full consultation. But generally speaking, if your tax debt is so large that you cannot under any circumstance pay it off with your current income potential, then, yes, most likely you would qualify. Own a BMW and a waterfront mansion? Not good if you’re applying for an Offer in Compromise.
We deal with Offers in Compromise daily. That’s our job — We are IRS Problem Solvers. For a confidential, FREE and no-risk consultation, call our office at 303-753-6040 Ext. 293.