Offer in Compromise: Some of Your Tax Debt Could be Forgiven
An offer in compromise is an agreement between a taxpayer and the IRS that settles a tax debt for a fraction of what is owed. It offers taxpayers a path toward putting their tax problems behind them, and getting a fresh start.
This is what national tax resolution scam companies are referring to when they say they can get you a settlement for pennies on the dollar. But the fact is that less than 40% of offers in compromise are accepted by the IRS. Only tax payers in very specific situations qualify, and every requirement must be answered correctly. A good, experienced tax attorney should be able to advise whether or not it is worthwhile going to the expense and time of filing an offer in compromise. Representation by a good tax attorney also greatly increases your chances of the IRS accepting your offer in compromise.
Three Types of Offer in Compromise
- Doubt as to Collectability Offer in Compromise: The IRS determines realistically how much a tax payer would be able to pay based on assets, current income and living expenses, and future earnings.
- Doubt as to Liability Offer in Compromise: The IRS gives taxpayers who have a legitimate doubt that they owe all or part of a tax debt an opportunity to settle. Doubt as to liability offers are not available to taxpayers who have already litigated their tax debt in court and lost.
- Effective Tax Administration Offer in Compromise: These offers are appropriate for taxpayers who owe an undisputed debt and face exceptional circumstances other than their financial ability to pay. The IRS will consider all facts and circumstances in determining a settlement they will accept.
Offer Amount for Tax Settlement
Determining an offer amount depends on the facts and circumstances of each individual case, as well as the type of offer being submitted. Some people qualify for settlement of pennies on the dollar, whereas others might need to pay a substantial portion of their tax debt.
How Ayar Law Can Help with Your Offer in Compromise
At Ayar Law, unlike many of the nationwide tax resolution firms you might see advertise on television, we will not take any money for an offer in compromise unless we know we will win. That is why the first step in every IRS tax settlement we do is a thorough analysis to determine what programs you qualify for.
Ayar Law Steps to an Offer in Compromise
- Perform thorough Analysis
- Prepare Offer Package
– Based on your individual circumstances
– Prepare using experience we have maximizing chances of success
- After submission, tax settlement specialist reviews in four to six months
- Negotiations begin
Our Detroit tax settlement attorneys have the negotiation skills necessary to get your offer accepted for the lowest amount possible. The entire process generally takes anywhere from six to eight months, during which time the IRS will not take any collection action against you.
Alternatives to Offer in Compromise
If an offer in compromise is not the right solution for your case, you may still qualify for
Either of these alternatives is effective in stopping the IRS from issuing a tax levy, and you might even be able to prevent a tax lien from being filed as well.
No Settlement Program for Michigan Taxes
There is no settlement program for debts owed for Michigan taxes that is comparable to the IRS offer in compromise.
Read More about Offer in Compromise
- Don’t Believe Everything You Hear: the Truth about IRS Offers in Compromise
- Why Michigan Needs a Tax Debt Settlement Program
- 11 Things You Must Know to Negotiate a Favorable IRS Tax Settlement
- Why Michigan Needs an Offer In Compromise Tax Settlement Program
- Fight That Urge to Flight: How to Deal with those Pesky IRS Notices and Settle Your IRS Tax Bill