The truth is that the IRS does offer taxpayers a limited opportunity to settle their tax debt for an amount less than owed. This limited opportunity is called Offer-in-Compromise (OIC). The process is lengthy, taking 12 months or more, and all taxpayers do not qualify for the OIC program. It is not as simple as phoning the IRS, and saying, “Hey IRS, I know that my client owes $100,000. He has about $10,000 in the bank. We’d like to settle the debt owed to the IRS for $10,000. This all the money the client has. Please accept.” Tax solutions are not this easy.
The OIC program is objective and based on numbers. An experience licensed tax professional will focus on your current financial situation and quickly assess whether you qualify for an OIC. There are several factors that the IRS reviews to determine if a taxpayer qualifies for an OIC, including the amount of equity in assets and the amount of monthly income earned in the client’s household. Equity is defined as the value of a piece of property over and above any mortgages or money owed on the property.
If a tax resolution firm is recommending settling for an amount considerably less than you owe to the IRS, ask how the proposed tax settlement was determined. If the firm’s tax professional did not ask detailed questions about your assets, household incomes, and your expenses, immediately find a different firm. To qualify for and to participate in the OIC program, the reviewing tax professional must have a complete understanding of your financial situation.
If the IRS is knocking on your door and sending you scary letters, call ALG Tax Solutions for help at 855-MI-TaxHelp, (855-648-2943)
IRS Circular 230 Disclosure: To the extent this writing contains advice on a federal tax issue, the advice is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication.