The Offer in Compromise program - designed to allow
the taxpayer to settle IRS tax debt for less than is owed.
I am sure that you have heard the advertisements on TV, radio, etc. stating that you can pay your IRS debt for "pennies on the dollar." Consider this. If that were true, wouldn't everyone be doing it? The fact of the matter is this. The Offer in Compromise program is very difficult to qualify for. That's right, I said "qualify for." Approximately only 1% of the offers submitted are accepted by the IRS. The way the program works is that you must qualify according to your individual financial situation. Nothing more, nothing less. Anyone who tells you differently is not being honest with you.
The Offer in Compromise is based upon doubt as to liability meaning that the taxpayer believes that the amount of the tax is incorrect or doubt as to collectibility meaning that the amount of the tax is correct, but the taxpayer is unable to pay.
Offers in Compromise are funded 3 ways: a cash offer, a short term deferred offer and a long term deferred offer. I will briefly explain each of these types of offers.
The cash offer is paid in five monthly installments. It is based upon your monthly disposable income times 48 plus your assets. It does not matter how much you owe the IRS, you still will only pay the above amount because it is based upon your ability to pay.
The short term deferred offer is paid in 24 monthly installments. This offer is based upon your monthly disposable income times 60 plus your assets divided by 24.
Finally, the long term deferred offer is based upon the amount of time left on your collection statute of limitations which I will discuss in another section. However, basically, it is your monthly disposable income times the months remaining on your statute of limitations.
As a local Florida Offer In Compromise Tax Attorney concentrating in IRS Problem Resolution, I can help you decide if an Offer in Compromise is the right solution to your IRS tax debt problem. Please call the Law Office of Mary E King for your free consultation at 941.906.7585 or email Sarasota Tax attorney Mary King Esq. for your free IRS Tax help consultation and learn how the offer in compromise program could help you.