An Offer in Compromise allows you to settle your or your business’s tax debt for less than the full amount you owe. It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship. The IRS and California state tax authorities consider your unique set of facts and circumstances:
- Ability to pay;
- Expenses; and
- Asset equity.
The IRS and California state tax authorities generally approve an Offer in Compromise when the amount offered represents the most they can expect to collect within a reasonable period of time. Explore all other payment options before submitting an Offer in Compromise. The Offer in Compromise program is not for everyone.
The best Offer in Compromise that I have had accepted by the IRS allowed my client to settle his taxes for less than one penny on the dollar.
Before you file an Offer in Compromise you must satisfy the following four conditions:
- You must not be in an open bankruptcy proceeding;
- You must have filed all required tax returns;
- You must have made all required estimated tax payments; and
- If you are self-employed and have employees, you must have submitted all required tax deposits.
If you haven’t done all of these things, don’t worry! We can help you with fulfilling these requirements.
It can take up to 2 years for the IRS to accept an Offer in Compromise, but the wait can be worth it. In my best result, I settled a client’s IRS tax debt for less than one penny on the dollar, and it took approximately 6 months.
If you’re interested in the IRS or California state Offer in Compromise programs, or if you think that you might qualify, give me a call at (408) 459-8427, and we’ll work towards relieving your tax debt.