This week in Tax Defense Network’s 12 Weeks of Resolutions, Tax Defense Network is highlighting the Offer in Compromise.
Tax Defense Network understands that many times when taxpayers find themselves in tax debt they are overwhelmed by the amount they owe. High tax debts often seem impossible to pay back, and in many cases they are. There are various tax debt resolutions for taxpayers for whom it would be impossible to pay back the entire tax debt. One option popular with taxpayers is the Offer in Compromise.
In an Offer in Compromise, the taxpayer and the IRS agree to settle the tax debt for less than what is owed. While the IRS wants to collect as much as it can toward a tax debt, it agrees to an Offer in Compromise if the amount settled upon is the most the IRS believes it can collect in a reasonable amount of time. For those that qualify, it means a substantial reduction in debt.
“Offers in Compromise are very attractive because they mean reduction in tax debt,” says Amanda Fronckoski of Tax Defense Network’s Business Development. “And people that qualify can significantly reduce debt: tens of thousands, even hundreds of thousands. It’s great, but the IRS only approves a fraction of the Offers in Compromise applications it receives.”
While attractive, Offers in Compromise are difficult to qualify for. The IRS has very strict qualifying factors for Offers in Compromise. They require total financial disclosure. The IRS examines income, assets, and equity in assets whether accessible or not, when considering a taxpayer for an Offer in Compromise.
“A lot of people come to us wanting OICs [Offers in Compromise]. They see competitors’ ads for pennies on the dollar, and that’s what they want,” observes Amanda. “But the IRS has a pretty strict equation it uses to calculate how much they think a taxpayer can afford. The IRS’ idea of what a taxpayer can afford is usually very different from what a taxpayer thinks they can afford. Offers in Compromise are really not for everyone.”
Tax Defense Network is a national tax debt relief company located in Jacksonville, Florida. Founded in 1997, it has helped to resolve over $120 million in tax debt of both individuals and small businesses. Its team of licensed tax professionals, CPAs and enrolled agents has over 35 years of combined experience. Tax Defense Network has an A+ rating from the Better Business Bureau.