Do you owe a substantial amount of back taxes? Are you having difficulty paying your tax bills? If so, you may want to consider a tax debt resolution option called offer in compromise. An offer in compromise is an agreement that you reach with the IRS to settle your tax debt for a fraction of the total amount. In some cases, you could pay pennies on the dollar. The IRS doesn't approve every offer in compromise proposal. However, they do accept some of them. If yours is accepted, the IRS will stop all collection efforts while you make payments. Once you finish the payment plan, your tax debt is settled forever. Here are a few tips on how to get your offer in compromise accepted.
Make your case. The IRS looks for serious, extenuating circumstances when they consider offers in compromise. For instance, if you are in a tough financial situation and the IRS believes there is little chance that you will ever be able to pay the debt, then they may consider your proposal. Also, if they believe that paying your tax debt would put you in a severe financial situation, they may also consider the offer. An example may be if you're also dealing with costly medical bills and can't afford to pay both the medical bills and your taxes.
However, don't exaggerate the severity of your situation. The IRS will do a thorough analysis of your financial situation to verify your claims. If they feel you're being dishonest, they may deny your offer.
Provide detailed financial information. When you submit the offer in compromise form, you will be asked about your income, assets, liabilities, living expenses, and more. Be as honest and detailed as you can be about this information. After they review your submission, they will likely ask for financial statements, bills, bank records, and more documentation. The process is extremely thorough. If you are missing any documents that they requested, your offer could be denied.
It may be helpful to gather all of this documentation at the outset, so you have it available when they request it. The faster you submit documentation, the more quickly you will receive a decision.
Make a fair offer. It's up to you to offer a settlement amount on your offer in compromise application. If it's a fair offer, it may be approved. The IRS can also counteroffer or reject your application outright. For the best chance of success, err on the side of offering more rather than less. The IRS will want to see that you are putting your available liquid assets and a portion of your future revenue towards paying the debt. Don't submit an offer amount that is only a fraction of your available cash or other liquid assets. Also, don't submit an offer that doesn't include some of your future income. Remember, the IRS will get all of the details on your financial situation eventually.
For more information, talk to a tax attorney, like http://www.wflaw.net. They can help you gather your documents, write a description of your situation, and calculate a fair offer amount.
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