If you owe income taxes, there is a method for settling the amount you owe known as "Offer in Compromise." The federal and state taxing entities created this process by which taxpayers who are unable to pay their tax liability can pay a fraction of the amount owed, much like credit card settlement. However, certain conditions are required for success (see below). Much like credit card settlement, when negotiating an Offer in Compromise, we will contact the IRS or state tax board on your behalf and offer a lesser amount than your liability (the amount you owe).
Need relief from tax debt? Call (800) 996-9932 today to discuss your options with our attorneys.
Is This a Good Option for Me?
The governing entities implemented the Offer in Compromise program for taxpayers
who do not have the income or assets available to pay their liability. The IRS or
the state taxing authority will consider your full financial situation when determining
whether to accept an offer. Thus, it is important to hire an attorney who is experienced
in gathering the appropriate information to present to the taxing authority along
with the offer.
This process is most often successful when the taxing authority has significant uncertainties
about the taxpayer's ability to pay the amount owed before the statute of limitations
for collectability expires. Sometimes, the taxing authority will settle where the
amount owed is in controversy. Finally, the taxing authority may accept an Offer
in Compromise when there are exceptional and extreme circumstances present. Because
these scenarios are uncommon, it is important to consult an experienced
Southern California debt settlement attorney
if you believe that you would qualify.
Do I Qualify for Offer in Compromise?
Unfortunately, most people do not. As mentioned above, there are very few circumstances
under which an Offer in Compromise will be accepted. Unlike many firms who take on
clients who they know will not qualify for Offer in Compromise; we will go through
your full financial situation during our
before accepting you as a client. Client satisfaction is of the utmost importance
to our firm, thus, we only accept clients for whom we believe we can get results.
When considering whether you qualify for Offer in Compromise, we will gather information
regarding your income, assets, expenses, total debt, and other hardships. Hardships
may include extreme medical bills, divorce, loss of employment, or unforeseen circumstances.
Please do not hesitate to call or contact our office if you think that you might
qualify for Offer in Compromise.
What is the Timeline?
Initial Consultation: As mentioned above, we will only accept clients for whom we believe that we can
successfully obtain an Offer in Compromise. If you believe that you may qualify,
please call or contact our office to begin the process.
Application: Taxing authorities have a standard application for the settlement process. We will
gather information from you and assist you in filling out the application form. It
is important to work with us in preparing this application as we will you present
best financial picture to qualify for the Offer in Compromise. After the application
is complete, we will submit it to the appropriate authority, and contact them to
make sure it has been received and is being processed accordingly. It is a lengthy
process to confirm receipt of this application (up to 2 months), so we will continue
to contact the authority throughout this time period.
Approval: After the application receipt is confirmed, we will remain in contact with the
taxing authority to ensure that the appropriate steps are taken for approval. This
process can take up to one year to complete. If the taxing authority ultimately approves
your application, there will be three payment options: lump sum, a short term payment
plan, and a deferred payment plan.
Recent Changes in OIC
In 2012, the IRS increased taxpayers' chances of a successful Offer in Compromise by making the qualifications for acceptance more flexible.* The changes allow taxpayers to solve their tax issues in a shorter period of time.* The changes included a revision of the future income calculation (looking less far into the future) and a more generous living expense allowance.* For example, taxpayers may now include credit card payments and bank fees in their allowable living expenses.*