The IRS Code states: "We will accept an Offer-in-Compromise when it is unlikely that we can collect the full amount owed and the amount you offer reasonably reflects the collection potential..." (Internal Revenue Code section 7122).
Often it is possible to fully and completely eliminate the taxes you owe - including all penalties and interest - at an enormous discount. There is no preset bottom limit that the IRS will accept to settle your debt especially if your offer is done "right."
You should be fairly certain that you are in fact a good candidate for the program before you submit an Offer-in-Compromise to the IRS. The Internal Revenue Service will either approve or reject the Offer based on two factors:
- Income of the taxpayer
- Assets of the taxpayer
If the IRS determines that your income or assets are not sufficient to cover the tax liability, the Offer has a good chance of acceptance. However, if you possess assets that would sufficiently cover the full tax liability if sold, the IRS will reject the Offer. The basic premise for the IRS to approve an Offer is that acceptance of the Offer will be in the IRS's best interest, not necessarily in your best interest.
It is important to realize that both the approval process and the factors associated with the calculation of the tax debt by the IRS are complicated and time consuming. In addition, if the Offer is submitted, and does not have grounds for being accepted, you will incur additional interest and penalties that continue to accrue. Even worse, the time period for the IRS to legally collect the debt can be extended, and the option to discharge the taxes in bankruptcy can be delayed.
Our firm is constantly contacted by new clients who were incorrectly advised by firms who promote the Offer-in-Compromise program to unqualified taxpayers. Most commonly, these "firms" charged exorbitant fees to taxpayers who were otherwise unqualified OIC applicants, and caused irreparable damage to the severity of the taxpayers pending situation.
During our initial consultation, our professionals will assess your qualifications for an Offer-in-Compromise.
If done correctly your debt may be settled for only a percentage of what you actually owe. The key is to determine the least amount that the IRS will accept from you before you make the offer.
