Is an IRS Offer in Compromise Right for You?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 15, 2021

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Taxpayers who have fallen on hard times but are looking to resolve their Internal Revenue Service (IRS) tax debt have the option of filing for an Offer in Compromise, a settlement program in which the IRS will settle for an amount less than what the taxpayer owes. How do you know if an IRS Offer In Compromise it’s the right option for you? Our tax law expert provides some answers about IRS compromise.

Justin Hein, Managing Attorney for Roni Deutch, A Professional Tax Corporation – a law firm that has been resolving IRS tax debts for American taxpayers for nearly 20 years – says that a lot of people might qualify for an IRS Offer in Compromise in the current economy for a number of reasons, including the inability to pay their back taxes because of a loss of employment or a reduction in pay.

Who is a good candidate for an Offer in Compromise?

An Offer in Compromise is generally a good option for a taxpayer who has had a consistent stream of income and expenses over a long period of time, but then something happened that caused them to lose their stream of income. Some examples are retirement, a disability, or being laid off without the promise of future employment. Another good candidate for an Offer In Compromise is a taxpayer with an old tax liability that the IRS has failed to pursue for collection. In this instance, the IRS might be more willing to settle for a lower amount before the time to collect expires than to collect nothing from the taxpayer.

Complications with IRS Offer Compromise

The IRS requires an in-depth analysis in order for a taxpayer to qualify for an Offer in Compromise. Hein states that the IRS will go over a taxpayer’s financial situation with a fine-tooth comb and they will pay close attention to the taxpayer’s assets. “If a taxpayer has tens of thousands of dollars in jewelry and artwork or a home that they own completely, they are not going to be a great candidate for an IRS Offer in Compromise because the IRS’s position will be that the taxpayer could potentially liquidate their assets in order to pay their IRS tax debt.”

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