Most taxpayers have by now heard of the Offer in Compromise, a program drafted by Congress years ago to help eliminate a choking surge of outstanding tax debt. Their assumption was to offer taxpayers a one-time opportunity to eliminate their debt for a fraction of what was originally owed, thus closing millions of costly collection cases.
At its core, an Offer in Compromise is a simplified agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt once and for all. The IRS has the authority to settle, or “compromise,” federal tax liabilities by accepting less than full payment under certain circumstances. The qualified taxpayer can save thousands of dollars, and the IRS, in turn, ends its costly collection process and gets a compliant taxpayer.
Claims and Expectations Though the Offer in Compromise continues to be an effective tool to dramatically reduce tax liability, and has spawned an entire industry claiming ‘Pennies on the Dollar’ settlements, we would like to clarify what exactly the Offer in Compromise can achieve and what claims should be dismissed.
Claim #1: The OIC can settle tax debt for ‘pennies on the dollar’.
True and False. While we find this statement to be grossly misleading, as it implies simplicity to settling outstanding tax debt, the Offer in Compromise can dramatically reduce a taxpayer’s tax liability. In most cases, savings can be in the thousands of dollars and the taxpayer can finally get a fresh start. To qualify for an Offer, however, is very specific, and if not done correctly can cause much more harm than good.Hiring a firm with years of experience and a skilled legal team is very important, as it can help stack the odds for a favorable Offer in Compromise in your favor should you qualify. Some taxpayers may try and save a little money by doing it themselves or hiring an inexpensive service. More often than not the Offer in Compromise is rejected, accepted at a much higher amount than necessary, or even worse, causes increased collection activity such as bank levies and wage garnishments. We’ve prepared thousands of Offers in Compromise, and can help you decide if this option is right for you.
Claim #2: Every taxpayer qualifies for an Offer in Compromise.
False. Although this remains to be one of the more popular advertised tax relief programs, not every taxpayer qualifies to have their tax debt reduced through an Offer in Compromise. In fact, the percentage of qualifying taxpayers is relatively low. Getting approved is a very specific process, and is one that must be approached carefully.
While our firm has drafted thousands of qualifying Offer in Compromise’s, our experience pays off when we can find a more impactful means of mediation when a client does not qualify.
Claim #3: All firms offer the same Offer in Compromise service.
False. To accurately prepare an effective Offer in Compromise takes time and experience. There is simply no getting around the work that must be done to accurately draft a substantial offer. As you would more than likely hire a seasoned attorney to represent you in court for a criminal matter as opposed to a first year law student, the same can be said of the experience needed towards your tax obligation. The upfront fee is fair, and the savings and results can be dramatic for the qualifying taxpayer.
Make sure and ask your assigned tax executive to better inform you of your options beyond the Offer in Compromise, as they can help explain the settlement process in greater depth and provide a realistic base from which to enter resolution.
Tax debt is, for most, the largest financial burden of their lives. Investing in a tax relief firm with years of experience and a dedication towards impeccable customer service is one of the best investments you can make. The process of drafting an Offer in Compromise is lengthy and complex, and is one that takes a staff of seasoned professionals and a fair fee to accurately address.
The first step towards successful resolution is to acknowledge that your tax debt won’t go away on its own and to seek professional assistance. Our firm of tax relief attorneys and tax relief professionals has helped thousands of individuals and businesses just like you stop forced collections and finally resolve their tax debt.
Our tax relief professionals will take the time to discuss your issue free of charge, and help map out the best solution moving forward. Rest assured, all information is confidential, and nothing will be shared.
We understand that you have many options when it comes to choosing the right tax relief firm, and we welcome the opportunity to help you patiently through this process and bring closure to this important financial consideration.