When You Hear About "Settling For Pennies On the Dollar" an Offer In Compromise Is How It Is Done.

An offer in compromise is becoming a more common way for tax payers to settle their back taxes. It is one way that you can legitimately settle your taxes with the IRS for less than you actually owe. To qualify for an offer in compromise you must meet a strict set of requirements, also the amount you settle for depends on your total equity or "perceived equity." The reason why an offer in compromise is becoming more and more common is mainly because the IRS can just be seen as an automated machine that runs on a specific formula, this formula has been cracked and there are many experts that know it very well and not only can they get your offer accepted, they can get it accepted for pennies on the dollar.

The purpose of the offer in compromise program is to find the best solution that works best for both the tax payer and the IRS. This means that the IRS needs proof that it is not worth it for them to pursue you for further collections because it will cost them more money to do that than they will get in return. However, be aware that even with an Offer In Compromise, 20% of the total offer must be sent in with your request. The 20% is not refundable if your offer is not accepted by the IRS so working with a tax expert is recommended. If the IRS does not accept your offer they will just apply the 20% or payment to your current amount due.

Offer In Compromise Requirements as Stated by the IRS

The IRS states may legally compromise your back taxes if you meet one of the following requirements regarding your back taxes:

• Doubt as to liability - You are able to show that there is doubt that the tax amount assessed is incorrect.
  
  
• Doubt as to collectibility - This is the most common method used when people file for an offer in compromise. The person must show that it is highly unlikely that the tax amount owed will ever be paid in full.
  
  
• Effective Tax Administration - With this type, the debtor does not deny that the tax is correct and could be collected, but if it were collected it would be unfair or inequitable because it would create financial hardship. Typically when an offer in compromise is granted under this requirement it is the disabled and elderly.
  
  

Filing For an Offer In Compromise

In order to file for an offer in compromise, you will need to complete a few forms, you may not be required to file all of these. These forms are the following:

1) IRS Form 656 - Offer in Compromise - This is the form where an actual offer is made to the IRS in which the tax payer offers a certain amount of money to the IRS in exchange for them canceling their outstanding IRS back tax amounts in exchange for that given amount of money.

2) IRS Form 656-A - Income Certification for Offer in Compromise Application Fee and Payment. If you are not required to submit a fee for the offer in compromise because of your income level, you must submit this form with IRS form 656.

3 ) IRS Form 433-A - Collection Information Statement for Wage Earners and Self-Employed Individuals. This form is used to help the IRS determine the likelihood of them being able to eventually collect the back taxes from you. This form will give the IRS a detailed view of your unique financial situation.

4) IRS Form 443-B - Collection Information Statement for Businesses. This is like IRS Form 433-A, but is for businesses. You are required submit this form if you are compromising your business back taxes owed. Fill out both forms if you are compromising both.

Why You Should Use a Professional Tax Service When Filing Your Offer In Compromise

This is the one filing with the IRS that can legitimately settle your back taxes for much less than you owe. According to application rates, only 13% of all offers in compromises are actually accepted. The majority of these applications are denied because they are not filled out properly or they do not meet the specified requirements of the IRS. The average tax professional (Tax Attorney or CPA) has worked on well over a hundred offer in compromise filings and is very aware of what is required in order to qualify. These professionals have the "IRS Formula" figured out. Not only are your chances a lot higher when using a tax professional, it is likely that you will be able to settle for less than if you did it on your own. When it comes to picking an amount to compromise your taxes for, it cannot be less than your total equity you have, having a CPA and Tax Attorney on your side is a good idea when picking this number.

At BackTaxesHelp.com we have a specialize have a team of tax professionals that specialize in getting offer in compromise filings accepted. If you are not a likely candidate, we will find the best settlement method for your particular financial situation. To contact our tax professionals, fill out the form here: Free Tax Consultation

 

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