Posted On June 12, 2017

Work with experienced attorney to secure installment plan, Offer in Compromise for tax debt, P.2

In our last post we began looking at some of the possible options taxpayers may have to obtain relief from burdensome tax debt. One of the options we mentioned was to apply for an installment agreement. Another potential option is to make an Offer in Compromise, which allows the taxpayers to settle with the IRS for less than the full amount owed.

The requirements to qualify for an Offer in Compromise are rather strict, which will exclude many taxpayers. The IRS makes a decision on an offer based on various factors—including ability to pay, income, expenses and the taxpayer’s asset equity—but the general principle is that an offer is usually accepted the IRS believes it is the most the agency will be able to receive from the taxpayer in a reasonable period of time.

An Offer in Compromise is usually not the first alternative for repayment a taxpayer seeks—usually other alternatives must be attempted first. There may be certain situations, though, where it makes sense for a taxpayer to submit an Offer in Compromise as an initial effort to seek relief.

An experienced attorney can help a taxpayer pursue either an installment plan or in making an Offer in Compromise, and can help determine whether any other forms of relief may be available. This includes taking advantage of innocent spouse relief or other relief available to spouses affected by their partner’s improper filings, or to file for bankruptcy.

In a future post we’ll look at the topic of tax debt relief through bankruptcy, and when this may be a potential option for taxpayers.