Are you stuck with a high tax bill and little means to pay it? While the IRS won't make your income tax obligation go away entirely, you may be able to get them to accept less than the full amount.
The IRS has a tax relief program in place called 'offer in compromise' (OIC). This program allows agents to settle with you over a tax bill, at a negotiated rate. Sound too good to be true? It's not, but it is hard to accomplish. So, what can you do to get your offer accepted by the IRS? Here are four things you should do to boost your chances.
Gather Documents. The most likely reason the IRS would accept an offer in compromise is when you lack the funds and assets to ever pay the bill. To prove this, you will need many, many documents showing your income, monthly expenses, debts, and future potential to pay. Gather as much as you can, in advance, so you know where such documentation is when the agent requests it.
Write a Letter. If something non-financial is robbing you of the ability to pay your taxes, you can include a personal explanation of this. The IRS takes into account serious health issues, addiction struggles, disability, and even the problems of those around you, if these affect your likelihood of being able to work out other payment arrangements. If you have a home situation that you feel should be taken into consideration, write a 1- or 2-page explanation of why that is.
Reassess the Liability. The second most common reason for the IRS to accept an offer is if there is doubt as to whether the assessed tax liability would stand up to scrutiny. So, make sure you meet with a qualified accountant who specializes in income taxes, before dealing with the IRS. If there is any significant way that the taxes due might not be as legally certain as it appears, you could convince the IRS that it stands to lose, if you pursue other appeals within the system.
Ask About Rejections. Generally, the IRS must explain why any OIC was rejected. So, if they do say 'no' to the first offer, ask for the report that lists factors for the rejection. Use this information to resubmit a new offer that solves the problems addressed.
Offers in compromise are complicated and should be navigated with the help of a professional in the field of tax relief. But it can be done, and the reduced debt will surely be worth the effort put into it.Share