When taxpayers who owe money to the IRS come into our office in Richardson, TX, one of the most common questions we get is to how to settle their debt for pennies on the dollar, as they hear in commercials. While under that they want to begin the process at the end, I usually have to explain to them that before we can even determine if they qualify for an Offer-In-Compromise, on of the things that we must do is to verify that they are in Tax Compliance, and if they are not, get them in it. You may be thinking – Why is it critical that I’m in Tax Compliance and what exactly does that mean?
On the IRS website, it states that before they can consider your offer, you must be current with filing and payment requirements. That is another way of stating you must be in tax compliance. NO COMPLIANCE = NO OFFER-IN-COMPROMISE.
If you think about it, that makes sense. From the government’s perspective, why would they want to take the time to cut a deal with you, if you potentially have other problems that will be found once you file additional returns, and they’ll need to go through the same process with you? From your perspective, it probably makes even less sense. Why would you want to go through the time and cost to file an Offer-In-Compromise, settling your debt, only to then file additional returns and owe additional monies to the government? Wouldn’t you want those debts being a part of the initial settlement as well? I know I would.
Exactly what does Tax Compliance mean? It means that -
- All Returns are filed that are due as of today (see below for a definition of “all”)
All Current Tax period payments have been made –
- Proper Withholding if you are a W-2 Employee,
- Estimated Tax Payments if Self-Employed, and
- Payroll Tax Deposits if an employer
Current Tax period payments have been While all returns should be filed, under IRM (Internal Revenue Manual) 188.8.131.52.18, it states that the lasts six years must be filed to qualify for the program.
I hope this article helped to explain what it means to be in tax compliance, communicated that it is necessary to file for an Offer-In-Compromise, and explained why it is in your best interest to be in compliance before making the application.
If You Need Help
We specialize in all phases of IRS Representation, including filing OICs on behalf of our clients, and we can help you get an Offer successfully filed, if you qualify. If interested, call us at (972) 821-1991 or email email@example.com.
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