Taxation & Estate Planning

Offer in Compromise Problems You should Know about

By Darrin Mish

Very often when you make an application for an Offer in Compromise, you will be confronted with various problems. Face it, the IRS does not like to accept less taxes than what they are due. But for you, knowing the potential Offer in Compromise problems will help you to avoid them. In fact, knowing these problems will also help you determine whether you qualify for an Offer in Compromise in the first place.

The first problem that will pose a problem in your Offer in Compromise is that you earn too much money per year. In such a case, the IRS will take it that you are able to pay off your tax burden eventually, even if it is in the millions. Some people have even considered quitting their jobs to prove they cannot pay their taxes, but that is not allowed. Quitting won?t help but if you are laid off, then you might have a case.

The second problem is that of having too many assets that can be sold to pay off the tax that you owe. When you have significant assets you are not considered poor. So do not expect the IRS to look favorably on your application for an Offer in Compromise. In fact, they will scrutinize your asset portfolio and find anything that can be sold so don?t waste your time making an application for an Offer in Compromise if you are laden with a lot of hidden assets. Your application is bound to fail.

Another problem is making errors in calculating the amount of taxes owed. If the amount calculated is higher than it should be, obviously you might not be able to pay. Another source of error may be typographical. You can try to show the IRS the error in hopes of removing your tax burden, but bad math or an incorrect calculation can have your Offer in Compromise application rejected so be sure you thoroughly check your work to eliminate Offer in Compromise problems.

The final problem I want to highlight is the problem of doing things yourself and getting it wrong. The application for Offer in Compromise is rather technical and it is easy to get the procedure wrong. That is why you need to have the advice of a tax attorney to help you out in discussing an Offer in Compromise with the IRS. The IRS is generally an organization that does not like to compromise so you will do well to hire an attorney to see what can be done to stand the best chance of a successful application.

Offer in Compromise Problems You should Know about is a post from: IRS Tax Problem Solver Blog - IRS Help

Full post as published by IRS Problem Solver Blog on January 24, 2010 (boomark / email).