Do You Qualify for an Offer in Compromise?

Today, we’re going to talk about one of the solutions to a tax problem: the offer in compromise.  This solution is often advertised on TV and the radio. The fact of the matter is that it’s not a solution for many people. It can be extremely challenging to qualify for the offer in compromise. 

In order to qualify for an offer in compromise, you need to have few assets, little income, and no prospects for increasing your income in the future.  If you have a tax problem and need an offer in compromise, don’t deal with no-name companies. You need to work with a real tax expert, such as a CPA or attorney; Never deal with a salesperson. Particularly, there are three types of offer in compromise.

1. Doubt as to collectability. In this case, you have few assets, very little income, and very few prospects. You probably can’t pay what you owe in taxes.
2. Doubt as to liability.  In this instance, you really don’t owe any money to begin with and don’t deserve to be penalized due to misinformation on the part of the IRS.
3. Effective tax administration. In this situation, you do have the money and admit that you have the money. However, perhaps you’re unable to take care of yourself, and you need those assets to simply exist..

The offer in compromise process is rather lengthy and detailed. The IRS requires a small application up front, as well as part of the tax that you are trying to pay off just to apply for an offer in compromise. The entire process can sometimes take more than a year. 

That said, the offer in compromise is a great program for those who qualify. If you have any questions, give me a call or send me an email. I would be happy to help you!