An Offer in Compromise is a beneficial option for individuals who cannot afford to pay their tax debt in full. It allows taxpayers to settle their debt for less than the total amount owed. A taxpayer may qualify for an Offer in Compromise by demonstrating financial hardship or if paying the balance in full would cause insolvency.
When applying for an Offer in Compromise, there is an application fee of $205. The IRS typically requires the taxpayer to make an initial payment. If a lump sum payment method is requested, the IRS may require 20% of the offer amount with the application.
The acceptance rate for Offers in Compromise is relatively low, primarily due to errors and omissions in the submission. Retaining a professional service like Advocate Tax Solutions increases your chances of acceptance. We have years of experience in Offers in Compromise. We will improve your chances of approval. Our professionals qualify, prepare, submit, and negotiate the Offer on your behalf.
Each taxpayer’s situation is unique, and not everyone will qualify for an Offer in Compromise. The IRS evaluates several factors, including the taxpayer’s ability to pay, income, expenses, asset equity, and future earning potential. The IRS may accept an Offer in Compromise if they determine that the amount offered is the most they can reasonably expect to collect from the taxpayer.
If the IRS accepts your offer and you fulfill the agreed-upon payment terms, you satisfy the agreement. The IRS does have a five-year rule that you must comply with to keep the offer in good standing. You must file the next five years of tax returns on time and accrue no new balances.
Remember, seeking professional assistance from experts like Advocate Tax Solutions can dramatically change the outcome of your Offer in Compromise chances of success.