Is an offer in compromise right for me?

The offer in compromise is a life jacket for many Faith Firm clients. However, before you make a decision, get the facts from a qualified professional who will advise you on your unique situation. Section 7122 of the tax code allows the IRS to “compromise” any civil or criminal tax liability on specific grounds – yet not all citizens fit the code’s criteria.

Unfortunately, tax resolution” companies engage in deceitful, high pressure sales techniques. They try to sell anyone and everyone on a program that is not meant for anyone and everyone. To avoid bitter disappointment, here are some questions an experienced tax professional will answer before you jump in…

Do you qualify? The radio ads make it sound like everyone is successful. That’s 100% baloney. According to the IRS, the offer in compromise does not work for the vast majority of taxpayers. However, if the offer in compromise is not right for you, another solution will be right for you.   

Are you prepared for the time required to get the offer processed? It takes 4 to 6 months to assign your offer to an investigator. After the investigator is assigned, it takes 3 to 6 months to complete the investigation. Then it can take another 12 months to get final acceptance. Upon final acceptance you are allowed up to 2 years to pay. However, you pay more to the IRS if you need more than 5 months to pay the accepted offer.  If your offer is rejected, and an appeal is filed, then tack on another 6 to 12 months.

Conditions may apply. Every offer in compromise has a five year probationary period attached to it. You have to stay current with every tax filing and payment obligation for five years following acceptance. If you fail to abide by these terms, the IRS will keep the money you paid, and you will end up back where you started – deep in tax debt.

Can you simply “run out the clock” on the IRS? The ten year statute of limitations is put on hold while the offer is pending. For example, if you submit an offer when there is only 2 years left to collect, and it takes a year to process the offer, the IRS will still have 2 years to collect if the offer is rejected because the time to collect is suspended while the offer is pending.

Look at every tax solution, not just the ones hyped on the radio. For more information, get the free book, The Truth about Tax Settlement and Alternative Tax Solutions