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Is an offer in compromise an option for my situation?

If you are ready to file your federal income tax return and you do not believe you can pay all of the taxes you owe, you may be wondering what options the Internal Revenue Service (IRS) makes available to you to help alleviate your tax burden.  An offer in compromise is one such option that may work in your situation.

In an offer in compromise, when a taxpayer is not able to pay the full amount of tax debt owed, the taxpayer submits a proposed lower amount to the IRS that the taxpayer is able to pay.  The IRS considers this proposed amount and the taxpayer’s situation and may be willing to “compromise” their position by accepting the lower amount in satisfaction of the entire tax debt owed.

The responsibility for initiating the offer in compromise process is on the taxpayer.  The taxpayer can start the process by completing IRS Form 656 Offer in Compromise, which can be found at http://www.irs.gov/pub/irs-pdf/f656.pdf.  The taxpayer must submit with the form a $150 application fee.  The IRS will apply this fee to your tax debt if they accept your offer, but it is non-refundable if the IRS rejects your proposal.

In evaluating the proposed offer in compromise, the IRS considers the applicants income from all sources, liabilities, and assets that could be leveraged in paying the tax bill.  The IRS may also consider other circumstances that make paying the full tax bill difficult, such as if the primary wage earner for a family has a serious illness that prevents him from working.  In summary, if the IRS believes you are not financially capable of paying the full tax amount in the near future or that requiring you to pay the full amount would create a hardship, they will be open to accepting an offer in compromise.  However, the burden of proof is on the taxpayer to demonstrate that they are in a position such that the IRS should accept the offer in compromise.  It is important that the taxpayer includes an accurate description of their situation with the form as well as any other documents that may help support the proposal.  For example, if you do not have the money to pay your tax debt, including copies of bills showing other expenses you must pay and paystubs showing how much money you earn may help support your claim.  If a medical issue is the reason you are not able to earn sufficient money to pay the tax bill, including copies of medical reports explaining your condition and a note from your doctor indicating how your condition impacts your ability to work may likewise help support your claim.

Can a tax professional help evaluate if an offer in compromise is right for me?

Yes, a tax attorney will be familiar with the requirements the IRS uses for evaluating an offer in compromise, if your specific situation falls within those requirements, and the offer amount and term the IRS is likely to accept.  If you complete the evaluation form at http://www.offerincompromiselawyer.com/Tax-Relief.php, a tax professional will review your situation for free and with no further obligation to you.  It only takes a few minutes to find out if an offer in compromise can help alleviate your tax burden, so complete the form to get started today.