An Offer in Compromise Can Help You Resolve Your Tax Debt
Offers in compromise are a powerful tool in the hands of an experienced tax relief attorney. If you have unpaid taxes, an offer in compromise can resolve your tax debt for less than you owe and offer many other benefits. For example, the IRS cannot garnish your wages or levy your property while you’re negotiating offers in compromise. However, they aren’t in everyone’s best interest. Midwest Tax Relief can help you determine whether this solution is right for you. Contact us today.
How Do You Qualify for Offers in Compromise?
Not everyone is eligible for offers in compromise. You must show that:
- Due to your financial circumstances, the IRS won’t be able to collect your unpaid taxes
- There is doubt as to whether you’re liable for the unpaid taxes, or
- Collecting your tax debt wouldn’t be in the IRS’ best interests
You also cannot have an active bankruptcy claim and you must be current on your tax filings.
To convince the IRS that you are eligible for an offer in compromise, you’ll have to provide significant financial information about you and your family and the IRS will carefully review your income and assets. Because this invasive process can open you up to additional tax liability, we strongly suggest that you consult with a tax relief professional before you request an offer in compromise.
If you’re unsure whether you qualify for offers in compromise with either the IRS or the State of Nebraska, contact our office for a consultation. We’ll take time to learn about your situation and help you assess your eligibility and all of your tax relief options.
How Do Offers in Compromise Work?
When we initiate offers in compromise negotiations, Midwest Tax Relief starts by filing a series of forms, including the IRS’ Offer in Compromise application (Form 656), financial disclosures (either Form 433-A or Form 433-B) and other documents. You also might have to pay a filing fee.
Submitting a Settlement Offer
As part of your application, you’ll need to make a settlement offer. Typically, your offer must be based on either:
- The amount of income you have left after paying your monthly expenses, or
- The net realizable value of your assets
When you work with a tax relief lawyer, they will guide you through these calculations, explain them to you carefully, and assign a reasonable settlement value.
Before you submit your request for an offer in compromise, review it very carefully. The IRS will scrutinize each and every form you submit. If you make mistakes or fail to disclose assets, you might delay your offer in compromise and might even face additional penalties. If you’re unsure about the application and need help, contact a tax relief lawyer immediately.
Negotiating the Offer
Once it receives your filing, the IRS will review your claim and evaluate your finances. It might also request additional information from you and your attorney, including pay stubs, bank records, and investment statements. Then, your tax relief lawyer and the IRS will negotiate the amount of your offer in compromise.
It’s important to understand that the offers in compromise process is slow and sometimes difficult. The IRS is very selective about when they agree to an offer in compromise and does not accept every application. If you’re serious about an offer in compromise, it’s almost in your best interest to consult with an experienced tax relief attorney. A lawyer can help you avoid mistakes that might lead to a denied or delayed offer in compromise or increased tax liability.
What Are the Benefits of Offers in Compromise?
While it might seem like a daunting process, there are significant benefits to an offer in compromise. First, if accepted, an offer in compromise can significantly reduce your tax debt and put an end to the threat of tax liens and levies. The IRS cannot garnish your wages or take your property while it is negotiating offers in compromise. This can give you space to breathe and time to rebuild. However, the IRS can still issue tax liens against your property. For more information about tax liens and levies, contact our office.
Once you arrive at an agreement with the IRS, you will either pay your offer in compromise in a lump sum or in monthly installment payments. Once the IRS receives your full offer in compromise, it will remove any tax liens it has filed against you.
Are Offers in Compromise Always My Best Option?
While offers in compromise are an excellent option for some of our clients, they are not for everyone. At the Midwest Tax Relief, we perform a personalized analysis of our clients’ situation and assess all of the tax relief options. An offer in compromise might not be your best option if:
- The IRS’ statute of limitations is quickly approaching
- Your eligibility for an offer in compromise is questionable
- You don’t want to go through the invasive process of proving your eligibility
In these situations, a tax relief lawyer can help craft an alternate solution that better serves your needs. It might involve an installment payment plan, non-collectible status, or deferred payments.
Tax relief laws are incredibly complicated and it’s understandable if you feel overwhelmed. That’s why the Midwest Tax Relieftakes time to understand each of its clients’ circumstances, immediate needs, and long-term goals. We don’t simply use cookie cutter solutions — we tailor customized strategies based on what you need. When you work with one of our tax relief lawyers, we’ll do our best to educate you and help you regain control of your tax debt.
Schedule a Consultation to Learn More About Offers in Compromise
At Midwest Tax Relief, we help guide individuals and families through the complicated process of obtaining offers in compromise and other tax relief. We pride ourselves on our practical and compassionate advice. If you’d like to learn more about our client-centered approach to tax relief, contact our office for a no-risk, confidential consultation.