An offer in compromise allows taxpayers to settle tax debt for less than the full amount owed. It is an option when the taxpayer cannot pay the full tax liability, or if paying would create a financial hardship.
The IRS considers your unique set of facts and circumstances in deciding whether to approve your offer in compromise, including your ability to pay, income, expenses, and assets.
Before you can file an offer, you must have filed all the required tax returns, and you are not eligible if you are in an open bankruptcy proceeding.
Your complete offer package will include
Form 433A Individuals or 433B Businesses and all required documentation as required, Form 656 Individual and Business Debt, $186 application fee, and initial payment.
Your initial payment will depend on your offer and the payment option you choose, either lump sum cash, or periodic payments.
With lump sum cash you submit an initial payment of 20% of the total offer amount with your application. If your offer is accepted, you will receive written confirmation. Any remaining balance due on the offer is paid in five or fewer payments.
With periodic payment, you submit an initial payment with your application, continue to pay the remaining balance in monthly installments while the IRS considers your offer, and if accepted, continue to pay monthly until it is paid in full.
If your offer is rejected, you have 30 days to appeal a rejection via Form 13711.
Contact Tax Attorney Abtin Barzin for help with your Offer In Compromise.