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Offer in Compromise

An Offer in Compromise is an agreement between the IRS and the taxpayer that settles a tax liability for payment of less than the full amount owed. It was designed by Congress and integrated by the IRS in 1992; authorizing the IRS to settle for less than what is owed in certain circumstances.

The goal of the IRS is to settle, and therefore eliminate costly accounts that cannot be collected on, at the earliest possible time and at the least cost to the government. In many cases an O.K.. will put a taxpayer back in the system, who has not had the ability to “catch up” creating a fresh start and future compliance.

The circumstances that would allow the IRS to accept an Offer in Compromise are:

• Doubt to Liability - This means that doubt exists that the tax amount assessed is correct.
• Doubt to Collectibility- Doubt exists that you could ever pay the full amount.
• Effective Tax Administration - The taxpayer has no doubt the tax liability exists and there is no doubt that the full amount could be collected, but an exceptional circumstance exists that would allow the IRS to consider your offer. It must be determined that the collection of the full amount of tax would create economic hardship or would be unfair and inequitable.

There are 3 payment plans that can be used with an Offer in Compromise:

• Cash - (90 days or less)
• Short Term Deferred Payment - (more than 90 days and up to 24 months)
• Deferred Payment - (payment terms are over the remaining statutory period for collection of the tax).

Notice: As of November 1, 2003, the IRS will be charging a $150 processing fee for all offers in compromise.

Get help with back taxes, levies and liens at CK Tax.CKTax can prepare any returns that have not been filed. If you do not have the records, they can obtain the records from the IRS, usually within 48 hours.

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