IRS Offer In Compromise

What is an Offer in Compromise?

An Offer in Compromise is an agreement between the taxpayer and the IRS that resolves the tax debt for less than the amount owed. The Offer in Compromise program was enacted by Congress giving the IRS the authority to settle or compromise tax liabilities under certain circumstances for less than the amount owed. It was established to help taxpayers who are unable to pay the tax debt in full.

Is an IRS Offer in Compromise right for me?

The Offer in Compromise although it can seem like a simple process it is actually very technical and tedious. Without evaluating the taxpayer's unique situation and financial information it would be impossible to know. In Doubt to Collectability the most common type of Offer in Compromise, the main factors are the equity in assets the taxpayer has (including but not limited to houses, vehicles and retirement accounts) and the monthly income and expenses of the taxpayer. The IRS has set standards and guidelines for housing and utility standard by county, vehicle standards and food & clothing standards according to household size. Typically, personal credit card payments are not allowed. However the are other factors involved and only by consulting with the Individual can we evaluate whether an Offer in Compromise is right for you.

What is the basis of an Offer in Compromise?

There are 3 reasons the IRS can legally compromise a tax debt:
1. Doubt as to Liability- Doubt exists that the tax assessed is correct.
2. Doubt to Collectability - Doubt exists that the tax debt could ever be paid back or the taxpayer has insufficient assets to cover the tax debt. The majority of Offers are filed under this.
3. Effective Tax Administration - There is no doubt the tax is correct and the taxpayer has sufficient assets to cover the debt. However, to force the client to liquidate to cover the tax debt would be inequitable or unfair given the circumstances. Typically, the tax payers are elderly or disabled in some way and need the assets as necessary to meet necessary living requirements.

What are the advantages of an Offer in Compromise?

1. If you qualify it is possible to settle for considerably less than the tax debt owed. The average Offer in Compromise accepted by the IRS is for 15% of the tax debt owed.
2. Unlike bankruptcy an Offer in Compromise will not go on your credit record.
3. The taxpayer has the opportunity to start over without collection action of the IRS.

Who can submit an Offer in Compromise?

Both individuals and businesses can submit an Offer in Compromise. All tax returns must be filed (if you have not done this, CKTax can prepare the returns for you).

What type of taxes can be compromised?

Basically all types of taxes can be compromised with an Offer in Compromise including 1040 taxes (individual), 1120 (corporate taxes), payroll taxes (940, 941) and also civil penalties.

How long will an Offer in Compromise take?

Typically, an Offer in Compromise will take between 4-9 months. New rules state the IRS require the IRS deemed an Offer in Compromise as accepted if it has not been returned, withdrawn or rejected after 24 months of the receipt of the Offer.

How long will I have to pay the Offer in Compromise back?

There are 3 options for paying an Offer in Compromise:
1. Cash Offer- The Offer must be paid with 5 months of acceptance.
2. Short Term Deferred Offer- The Offer must be paid with 24 months of acceptance of the Offer.
3. Long Term Deferred Offer - The Offer must be paid within the time on the statue left to collect on the tax debt.

Will an Offer in Compromise stop collection actions against me?

Yes, once an Offer is received the IRS will put codes on the account to stop collection action.

What are the advantages of hiring representation for the Offer in Compromise process?

The Offer in Compromise process is both technical and legal. Without understanding of the IRS code, the taxpayer is at a real disadvantage against the IRS. Approximately 75% of Offer in Compromises submitted are rejected before they even get to an IRS OIC technician at due to the forms and documentation being incomplete or being filled out incorrectly. Of the remaining Offers many are rejected or pay higher than the amount necessary due to lack of knowledge of the IRS process. A technicality can throw a whole Offer out. You need an experienced, competent professional on your side, that knows the IRS code, the Offer in Compromise process and can aggressively present your case.

Why choose CKTax Inc.?

1. We have been in business since 1995 and have successfully helped thousands of tax payers negotiate their tax debt with the IRS.
2. We are a personal company and easily accessible. One person will represent you through the entire process unlike many companies where you do not know who you will get to talk to or who is handling your case.
3. We have a policy to return calls and e-mails within 24 hours excluding weekends and holidays. Even then, we are usually available on weekends.
4. We have an A+ rating with the BBB.
5. Our track record and testimonials speak for themselves.
6. Many companies now will take anyone, receive their fees and submit the Offer whether the taxpayer qualifies or not. The IRS has even put out a warning on this. We at CKTax will scrutinize your situation to see if you qualify before taking the case, this is a free consultation at no charge to you. We refuse to pressure you to make a decision, we will give you the evaluation of your particular case, your options and answer any questions, we know the final decision must be something you are comfortable with.
7. Affordable fees, we work on a flat fee basis discussed with you upfront. There are never any hidden fees are extra charges that you are not aware of.