An Offer in Compromise might be the greatest option for taxpayers in the United States with an unaffordable tax burden. Both parties may agree to settle a tax liability for less than the full amount owed. All this is possible through a program called Offer in Compromise. In exchange, the IRS is able to recover a portion of the debt, allowing the taxpayer to escape their crushing debt burden. Although all parties may benefit from an Offer in Compromise agreement, there are possible risks for taxpayers throughout the procedure. Furthermore, there is no assurance of success because the IRS rejects the majority of Offers in Compromise. This makes obtaining legal counsel in relation to the Offer in Compromise program more prudent for a taxpayer. It will increase the chances of your Offer in Compromise being accepted by the IRS.
Offer in Compromise – What Are The Benefits?
A taxpayer can gain from entering into an agreement known as an “Offer in Compromise” with the IRS in a number of ways, including the following:
- Back taxes owed are paid
- Release of all federal tax liens
- Lowering of tax obligations
- Collections activity is stopped
- It is one of the best and most practical ways to prevent bankruptcy
There are, however, some possible drawbacks for the taxpayer. The taxpayer must submit complete financial disclosure of proof of their assets and income particularly if they allege financial difficulty or an inability to pay. The taxpayer is also required to pay all upcoming tax obligations for a period of five years. If failed to do so, it could lead to the invalidation the deal and result in the original sum of money being payable once more. More info about offers in compromise, especially how to get the most out of such an offer can be found here.
