This information applies to the “Offer in Compromise” policy with the IRS. It only comes into play if you owe taxes and have a reason to present about why you can’t pay the full amount.
Offers in Compromise are tax settlements for less than your actual balance. Required tax returns for the tax years in question need to be filed and you need to be current on estimated tax payments. Basically, an Offer in Compromise is calculated by determining your available equity in assets. This includes all your taxable income, and your expenses.
There is a bit more to the story – please engage with our tax help guide for more details – but that’s a summary in a nutshell.
In radio commercials and other media, you hear these advertisements for “pennies on the dollar” tax settlements by tax relief companies. Actually, Offer in Compromise offers might conclude at an even better rate than pennies on the dollar, or perhaps settled for 10% of taxes owed, but every case is different and there are no guarantees.
For many people this year, they have income that’s the same, while expenses are going up across the board. This will make it easier for some of you to qualify for an Offer in Compromise.
Some people are making a lot more, and in some cases the amount they make has increased well beyond their living expenses. If that is the case, their odds are not as good to get an Offer in compromise accepted.
A lot of small businesses are struggling due to COVID, and the IRS has been generous in acknowledging that. Those small business owners may be more likely to get an Offer in Compromise accepted. As has been pointed out previously with int media, the deeper long-term impacts of the COVID pandemic on the economy may not even be possible to estimate at this point.
Another item to consider is the increase in property values and some stocks. If you got a lot more equity in assets than before, that can decrease your odds of getting an Offer in Compromise accepted.
If you want a realistic consultation – with a real attorney – on whether you might qualify for an offering compromise, give us a call at 888-515-4829 or go to tp.tax/start
For information on handling IRS tax issues yourself, search our helpful blog and tax law database.
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