If you owe the IRS taxes and unable to pay in full and want to see about paying a smaller amount about what you can afford, the IRS has an Offer In Compromise Program established to give taxpayers and business owners the opportunity to submit paperwork for it to be considered. Unfortunately, there is NEVER a guarantee you would be eligible for what you consider your Offer In Compromise amount to be accepted, and it still does not release you from your full tax obligation if you fail to pay your agreed discounted tax liability.
For 2021, only 31% of Offer In Compromise applications were accepted out of over 49,000 submissions, partially because of:
- incomplete information or fee had been included,
- inadequate tax returns not completed before the Offer In Compromise submission,
- your tax case has been sent to the Department of Justice,
- you have failed to stop making payments on your tax returns,
- you are in bankruptcy proceedings,
What Are The Requirements?
The Offer In Compromise Program is for the full debt that is not completely collectible. After acceptance, you are required to, for a period of 5 years or until the Offer In Compromise has been paid in full, whichever is longer. This means that if you do not file and make regular payments on future tax returns, will likely take you back to the original tax liability and remove the Offer In Compromise you were approved for and add interest and penalties from the beginning of the application process.
Applications and Documentation
With the IRS Offer In Compromise applications and documentation that needs to be prepared and reviewed by the IRS, along with a fee for review, you cannot just choose any numbers to be considered as your offer to pay as your tax liability for the IRS to take you seriously. They not only do a review of all of your assets and income, but they also review how much the government determines food, utilities, clothing, transportation, rent, etc. costs in your particular area based upon the size of your family.
Process Length
The Offer In Compromise process can take upwards of 24 months, with correspondence reverting back and forth with deadlines to be met, and failure to do so can suspended or discontinue your application process completely. This is why it’s important to contact a tax resolution associate with Bookkeeping-Results, LLC if you’re interested in learning if you’re eligible for an Offer In Compromise to be accepted.
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