Taxes: Offer in Compromise

IRS Offer in Compromise / Settlement

What is an Offer in Compromise?  The Internal Revenue Service (IRS) has a program called the "Offer in Compromise" for taxpayers that are living with financial hardship and who are unable to pay their back taxes.  Eligible taxpayers can settle their back taxes and get a fresh start.

Can Anyone File an Offer in Compromise?  No.  The Offer in Compromise program is not designed for everyone.  The purpose of the program is to help those who are truly struggling and can't pay their taxes in full or over time on an Installment Agreement.  

How Do I Determine If I am Eligible for an Offer in Compromise?  Before you file an Offer in Compromise there are a number of different factors that you need to evaluate such as: income vs. expenses; equity in assets; dissipated and transferred assets; future income; tax compliance; and, other factors regarding your personal situation.  Consulting with an experienced tax professional can help determine your eligibility and the basis for your offer.   

How Much Do I Need to Pay for My Offer in Compromise?  When you file an offer you must pay a filing fee and then your offer amount.  Your offer amount should be based on what the IRS calls your "reasonable collection potential" (RCP).  In short, your offer is based on whether you can afford to make payments to the IRS and how much equity you have in assets.

Are There Fees to File an Offer in Compromise?  Yes, the IRS charges a $150.00 filing fee.

What is the Offer in Compromise process?  The Offer in Compromise process is done by completing the necessary financial forms, providing supporting documentation, and working with an IRS offer examiner in reviewing and negotiating the final terms. 

Do I Have to Go to Tax Court for My Offer in Compromise?  No, in the majority of cases taxpayers never go to court, the process is conducted through the mail and over the phone.

Why Not Just File Bankruptcy to Get Rid of My Back Taxes?  In some situations filing bankruptcy can be a means of resolving your back taxes.  However, an Offer in Compromise does not damage someone's credit like a bankruptcy.  Also, tax debt has to be a certain age before it is eligbile for discharge in bankruptcy and you may not be able to discharge in bankruptcy certain types of taxes, like payroll taxes. 

What Happens to Collection Activity When I File An Offer in Compromise?  When you file an Offer in Compromise IRS collection activity will stop pending review.  Thus, the IRS is suppose to refrain from wage garnsihments and bank levies while your offer is being reviewed.

Do I Need an Attorney to File an Offer in Compromise?  The Offer in Compromise program does not require a taxpayer to have formal representation to submit an offer.  However, as with most legal matters having an attorney can help you simplify the process, ensure that you qualify, answer your questions, give you encourgaement, and provide you with gudiance. 

What Experience Do You Have With Helping Taxpayers?  As a licensed attorney, I have prepared hundreds and hundreds of Offer in Compomise packages for taxpayers across the United States.  I have worked on Elk Grove Offer in Compromise, Sacramento Offer in Compromise, Folsom Offer in Compromise, Roseville Offer in Compromise, Rocklin Offer in Compromise, and with several other taxpayers throughout Northern California. 

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