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Offers in Compromise

You have an outstanding account with the Internal Revenue Service that is currently due and you have been notified that unless you pay your account in full, the IRS will initiate collection activity immediately.

In some cases the Internal Revenue Service will accept an offer to settle your account for less than the amount due if your financial resources are limited or special circumstances exist.

The IRS has contacted you concerning the payment of an outstanding tax debt. It is possible that you do not have the resources to pay the entire amount on demand or if you did pay the entire amount immediately, your financial resources would be depleted to such an extent that meeting basic living expenses would become difficult or impossible. Nevertheless, the IRS continues to demand payment. 

You have the right to offer to settle your account with the IRS for less than the full amount due and the IRS has the authority to accept offers in compromise in certain, specific circumstances. However, unlike many of the commercials on television would have you believe, the process of preparing an offer in compromise is not simple, the IRS is not required to accept any offer submitted, and the notion that the IRS will settle every offer for pennies on the dollar is simply not accurate.

If you choose to submit an offer in compromise to the IRS, you should be aware of the fact that there are only two methods for submitting an offer that assure you that the offer will be properly reviewed. An offer can be presented during a Collection Due Process Proceeding or it can be submitted to one of two national processing centers for offers in compromise.

You should also be aware of the fact that an offer in compromise must be based upon one of three circumstances: Doubt as to Liability; Doubt as to Collectibility; or Exceptional Circumstances such as economic hardship.

    An offer in compromise that meets the IRS standards for review and acceptance will, at a minimum, take into account national standards of acceptable living expenses; valuations of real and personal property; substantiation of living expenses, assets, and income; and your compliance history with the tax laws. It is also possible that evidence of special factors such as health, age, employment history and prospects and dependants may need to be presented in your offer to increase the probability of acceptance by the IRS.

    It is particularly important to recognize that the material you submit to the IRS will not only provide the basis for approval or denial of the offer, but it will also be the only materials considered if you choose to appeal a denial of your offer in compromise. Understanding that the materials, analysis and presentation included with your offer in compromise forms not just the basis for consideration of the offer nut also the basis for consideration on appeal significantly increases the need for your attention to detail in the preparation of an offer in compromise.

    Finally, in certain cases collateral agreements may be appropriate in structuring a successful offer in compromise. Collateral agreements will typically help address situations where apossibility of significant future income or an expectancy exists or where depreciable real or personal property is available for liquidation, but if liquidated, would substantially decrease revenue required to meet basic living expenses or would negatively impact income generating business activities.

 We have the technical expertise and experience you should expect from your advocate as we work together to develop the structure of an offer in compromise, prepare and present the offer in compromise to the IRS, and resolve your case with terms favorable relative to the circumstances as presented.