IRS Offer in Compromise, IRS Levy, IRS Liens, IRS Garnishments; State of California Offer in Compromise, Levies, Liens and Garnishments - Solutions.

Fresh Start Offer in Compromise

   References/Related Topics

• Offer in Compromise
• Struggling with Paying Your Taxes? Let IRS Help You Get a Fresh Start
• Form 656, Offer in Compromise Booklet (PDF)

IRS Announces More Flexible Offer-in-Compromise Terms to ... 8/2012   

   Related Items:

• Interim Guidance Memorandum for Offer in Compromise
• Internal Revenue Manual 5.8.5.5.1, Income-Producing Assets

FAQs for New Offer in Compromise Rules 9/2012

What is an Offer in Compromise?

An IRS offer in compromise is an agreement between a taxpayer and the Internal Revenue Service (IRS) that resolves a taxpayer's tax liability. The IRS has the authority to settle, or compromise, federal tax liabilities by accepting less than full payment under certain circumstances. The IRS may legally compromise for one of the following reasons:

• Doubt as to Liability Offer in Compromise: Doubt exists that the assessed tax is correct.
• Doubt as to Collectibility Offer in Compromise: Doubt exists that the taxpayer could ever pay the full amount of tax owed. The minimum offer amount must generally be equal to (or greater than) the taxpayer's reasonable collection potential (RCP). The RCP is defined as the total of the taxpayer's realizable value in real and personal assets, plus his/her future income.

Unless the taxpayer files an offer in compromise claiming special circumstances, the offered amount must equal or exceed the reasonable collection potential. Realizable value is the asset's quick sale value (amount which could be reasonably expected through the sale of the asset) minus what the taxpayer owes to a secured creditor.

• Effective Tax Administration Offer in Compromise: There is no doubt that the tax is correct and no doubt that the amount owed could be collected in full, but exceptional circumstances exist such that collection of the full amount would create economic hardship or where compelling public policy or equity considerations provide sufficient basis for compromise.  The taxpayer bears the burden of proof to show their offer in compromise qualifies for public policy or equity considerations.  They must show that their circumstances are compelling enough to justify acceptance of their offer in compromise compared to other taxpayers in similar circumstances.

Offer in Compromise and IRS Policy:

 Policy Statement P-5-100 states:

The Service will accept an offer in compromise when it is unlikely that the tax liability can be collected in full and the amount offered reasonably reflects collection potential. An offer in compromise is a legitimate alternative to declaring a case currently not collectible or to a protracted installment agreement. The goal is to achieve collection of what is potentially collectible at the earliest possible time and at the least cost to the Government. The Toll Free Number for an Offer in Compromise is 1-866-482-9707.

Submit your Free Offer in Compromise Consultation request   

Can you relate to that vicious cycle of being afraid to make money because of the IRS monster looming over every waking hour of your day? Have you been in the position of making payments on "back" taxes hoping to appease the IRS, and then realize that your payments didn't reduce your debt? Do you then find that your situation has worsened because you didn't pay enough in current year taxes, having used the money to pay on the old taxes? Now, you not only owe for another tax year, but the IRS views you as "pyramiding".

The Offer in Compromise program may be a solution for you. But, merely submitting an Offer in Compromise is not enough. Even getting an Offer accepted is not enough. You must set up a PLAN to ensure that all current and future taxes are full paid, and all returns timely filed. Under an accepted Offer, you agree to comply with all provisions of the Internal Revenue Code relating to filing returns and paying the required taxes for at least 5 (five) years. Thus, if you fail to meet such requirement, the "back" tax obligations return. My office provides experienced legal services in helping you set up a plan so that the Offer becomes a long term solution.

The Offer in Compromise program may be right for you. Please call to discuss your situation and a plan of action for you.    

1.    

• Historically, the Service's compromise authority has been limited to cases in which either doubt as to collectibility or doubt as to liability or both is established. The Internal Revenue Service Restructuring and Reform Act of 1998, however, has expanded the Service's compromise authority. The Service now has the authority to compromise, where appropriate, cases involving issues such as equity, hardship, and public policy. The Service may now compromise cases involving equity and hardship issues where compromise would "promote effective tax administration."
• The effective tax administration basis for compromise applies only where the taxpayer does not meet the requirements for doubt as to liability or doubt as to collectibility ...
• Refer to Internal Revenue Manual Provisions.

14.   

UNITED STATES TAX COURT 
RONALD J. AND JUNE M. SPELTZ, Petitioners v. 
COMMISSIONER OF INTERNAL REVENUE, Respondent 
Docket No. 15382-03L. Filed March 23, 2005. 

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CAUTION: There are many providers of services on the internet who will submit your Offer in Compromise forms. However, such providers merely have you complete the forms. These bargain basement "Offer experts" may be only mailing the forms you prepare to the Internal Revenue Service. Thus, they have done nothing for you. In fact, they may end up costing you more because critical review and analysis has not been done. When completing the financial statement forms and making the Offer, you are painting a financial picture that will determine the amount of an acceptable Offer. Unless your representative has the necessary skills and experience, you may have paid a small fee, only to be subjected to settling for more under the Offer than you otherwise should have. Your professional must have experience in: calculating your income and expenses; determining the amount of the offer you should make; valuing your assets and liabilities;  reviewing joint ownership considerations; working with the tax law and IRS internal procedures; arguing the facts and the law, and negotiating with the IRS. 

The IRS has a history of intimidation, and let's face it, they will take advantage of any taxpayer who represents himself, and even a taxpayer's advocate who is weak. Remember, IRS Offer Specialists generally have "collection" backgrounds and they come at you from the perspective of getting as much money as they can.

In the end analysis, you should measure the benefits you derive from the final result. For a taxpayer to engage someone who merely mails in your Offer forms for a $300.00 fee, what at first blush looked like "such a deal", may in reality end up costing you many thousands of dollars more because you didn't choose a tax professional who would negotiate the best settlement for you.

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