We owe several thousand in taxes. Has anyone had luck with the IRS and an Offer in Compromise? It's not that I am trying to get out of paying taxes. I've always paid whatever owed. But recently I was out of work (and NO I didn't collect unemployment) for a few months but am at a new job now. Being out of work hurt us financially so I would like to see if the IRS would take a lump sum and forgive the remainder. Anyone try this and succeed? Thanks
Update:We owe greater than $10,000 to the IRS. Am back at work thank good ness, but being out and suffering a health condition for which I am now recovering, and my wife having a baby drained our savings, so we ended up using credit cards to help us get by. So now we are in over $20,000 debt but we both work, so we will work out something to get it all paid off. Thanks
Answers & Comments
Verified answer
Define "several thousand".
Generally, the IRS won't accept OICs if the taxes due are under $10,000.
OICs are usually for people that would never be able to pay what they owe. If you of working age and you now have a job, they would probably decline any OIC offered.
The IRS Commissioner has recently made an Offer in Compromise easier to qualify for. If you are qualified and eligible for an Offer, the key to having your settlement accepted is doing it correctly. The IRS will be looking to reject your Offer as "un-processable". If you do not have an "i" doted or a "t" crossed, the IRS will kick out your Offer and ou will have to start all over again. At this point in time, an Offer is taking, on average, approximately 13 months for the IRS to make a decision. During that time, the IRS cannot Levy you and must cease collection activity. If you are not qualified for an Offer, it may be possible to reduce and/or eliminate penalties and interest due to "reasonable cause" (such as medical or loss of income) depending on how you got into this predicament. If you would like to consult with me, you can reach me through Flat Fee tax Service which you can find through a Yahoo search.
If you can come up with an amount that represents what IRS considers the reasonable collection potential of the account, it will accept it. Ideally the money comes from a source that IRS has no right to like a loan or gift from a family member. I just had a client's offer accepted for $1,000 on a $30,000 balance due.
If you have a job now then you don't stand a chance at getting an OIC.
OIC is for people who have absolutely no way to satisfy their debt and don't expect to EVER have a way to satisfy the debt. Basically the IRS will only accept an OIC if they think your settlement offer is more than the amount they could collect from you through wage garnishments, bank levies, and all other collections practices available to them.
Just set up a payment plan with a payment you can afford and work through it.
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