Offer In Compromise

The Offer in Compromise engagement is a contract between a person or entity and the Treasury Dept or more commonly the IRS. This contract will negate the person or entities tax liabilities to the IRS for alot less then what is owed. If the IRS believes that an alternative form of payment can be obtained they will exhaust all options before engaging the Offer In Compromise for the taxpayer or entity.

In most engagements of Offer In Compromise, the IRS will reject the Offer In Compromise if the cash amount offered by the person or entity is equivalent to or greater then the reasonable amount the IRS could collect through normal IRS collection procedures. The reasonable amount of collection is the crucible that the IRS measures that a person or entity can repay through normal channels through liquidation, of homes, cars, and on hand bank accounts. The Reasonable Amount of Collection also includes future capitalizations by the person or entity as to their ability to repay there total tax debt in a 5 year period. These considerations must be calculated before attempting to file for an Offer In Compromise.

There are three types of Offer In Compromise engagements

Doubt as to Liability When and if there is a dispute in regards to engaging your Offer In Compromise in regards to the amount, computer error or even possible identity fraud Doubt as to Liability can be invoked. Doubt as to Liability can be invoked to negate and wipe out any and all back tax debts, and bring the taxpayer or entity into IRS compliance, this is an option that must be reviewed when submitting your Offer In Compromise.

Doubt as to Collectibility in reference to Filing an Offer In Compromise is determined by the IRS counselor assigned to your case . To reinforce this doubt as to collectibilty the taxpayer or entity must submit there tax documents and all relevant evidence, to back up any claim so there is no doubt that the tax liability will never be repaid and the submission of the Offer In Compromise agreement is the formal document to convey this fact and acceptance by the IRS of this fact will actually negate the total tax liability, no matter how much is owed.

Effective Tax Administration When exercising this option in the offer In compromise agreement there is no contest as to the amount owed and the IRS would have no problem in collecting the full amount, but a serious circumstance or series of circumstances has and will prevent you form making the full tax liability payment to the IRS . For this stipulation to work, the taxpayer or entity must demonstrate that undue and unfair economic hardship would result from the IRS pursuing repayment options.

An Offer in Compromise when engaged correctly is the taxpayers magic wand in making all of there tax liabilities disappear. The only catch is knowing if you qualify for this program. Most taxpayers do not. If you have the ability to pay,
then you probably do not qualify for this option.

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