Need Offer in Compromise Help?
The IRS struggles every year to collect unpaid taxes. Interest and penalties accrue on all tax debts until paid and often penalties and interest can equal two or three times the original tax amount. However, the IRS and Congress soon realized that getting something was better than nothing and that it made sense to forgive tax debt if at least some portion of the tax was recovered. This resulted in the Offer in Compromise program.
As the criteria for installment payment plans center on the ability to pay, so does an offer in compromise. The IRS will consider normal household expenditures in the application, but getting qualified is not always easy.
The rejection rate is very high. This often is the case as submitted documentation is often incomplete, the taxpayer is delinquent with tax filings or the taxpayer earns above the required financial allowance. Make sure you review your application in detail and submit the required information.
If the IRS sends you a response, make sure that you respond promptly. You may only have a few weeks to get the final information prepared and submitted back to the IRS. Failing to timely respond is often a reason for rejection.
Upon final review, the IRS assesses the taxpayer’s collection potential. This is where many offers breakdown. The taxpayer may not have the funds currently, but they are generating income and have the ability to pay off the entire balance over time. Under these circumstances, the IRS would prefer an installment agreement rather than an offer in compromise.