The IRS considers each person’s situation on a case-by-case basis. There are guidelines to follow for income, expenses allowed, assets owned, and finally, if they feel you have the ability to pay. The IRS will generally approve an offer in compromise if they feel the offered amount represents the most they can collect within a reasonable amount of time.
This program isn’t for everyone. If you don’t qualify, you should consider an installment agreement.
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The IRS considered each person’s
situation on a case-by-case basis
situation on a case-by-case basis
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Forms that must be submitted include a Form 433 disclosing all income, expenses, assets and debts. This is a key document. Form 656 must also must also be filed requesting and justifying your offer; this will include taxes due and years covered, your reason for the offer, low income certification, payment terms, the amount of down payment and deposition of the offer, your source of funds for that down payment and continuing payments, and finally, your offer terms. Lastly, there is a filing fee required of $186 that must accompany the offer in compromise.
You have payment options that include lump sum cash, which is paid over five or fewer months. A required 20% non-refundable deposit is paid at application time while your offer is being considered. Your other option is periodic payment, which is paid in six or more monthly payments, and in full under 24 months after your offer is accepted by the IRS. It can usually take up to a year to get an offer accepted. If the IRS does not make a determination on your offer within two years, your offer is automatically accepted.
These are just some small details for an Offer in Compromise with the IRS. It takes a great deal of time and documentation. To get your least amount to pay to the IRS, you should hire a qualified tax problem specialist. Please feel free to reach out to me for help or for answers to any questions you have.
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