IRS Back Taxes? How An Offer in Compromise can Help

There are different ways you can settle your back taxes with the IRS. One way you commonly hear about is through an Offer In Compromise. An offer in compromise is a formal agreement between a taxpayer and the IRS in which the taxpayer’s liability is settled for less than the total amount owed. This sort of agreement will not be accepted by the IRS if they believe that the taxpayer can pay in full or through a payment agreement.

If you are interested in an offer in compromise you need to be aware of the grounds on which the IRS may accept an agreement:

1. Doubt as to liability. This is when there is doubt as to whether the tax liability is accurate.
2. Doubt as to collectibility. Doubt that the taxpayer will ever be able to pay the total amount owed.
3. Effective tax administration. If there is no doubt that the liability is accurate and can be collected the taxpayer may be eligible for an offer in compromise on these grounds. To be eligible the taxpayer must be able to prove that paying the total tax liability would cause an extreme economic hardship.

To take advantage of an offer in compromise there are several documents that must first be filed. The taxpayer is required to submit a $150 fee, as well as an initial payment, along with Form 656 to the IRS. Form 656-PPV, the offer in compromise payment voucher, should be completed and sent along with any periodic payments to be made in the future.

Most taxpayers never think twice about an offer in compromise because they do not qualify. That being said, if you feel that you are eligible based on the grounds above you should contact a Tax Professional firm to help you as the acceptance rate is very low.

IRS Offer In Compromise
Get the help you need today with an Offer In Compromise by using a trusted tax firm like ours with experience and a high IRS OIC acceptance rate track record. Settle up to 80% of what you owe.