If you owe a significant amount of money to the IRS but are unable to pay your tax bill because of a financial hardship, one option that may be available to you is an Offer in Compromise.
An Offer in Compromise with the IRS is an option for some taxpayers to settle their tax obligations for less than they actually owe, and is designed to provide some relief to taxpayers who have a legitimate financial hardship.
When applying for an Offer in Compromise arrangement, taxpayers need to show, through facts and circumstances, that they don't have the ability to pay their tax obligation through other means such as an installment plan with the IRS. In reviewing and evaluating applications for Offers in Compromise, the IRS considers taxpayers' ability to make payments, taking into consideration the taxpayers' income, expenses and equity in their homes or other assets.
Most applicants must pay a non-refundable application fee and an initial payment, however low-income applicants who meet certain requirements are exempt from this requirement.
Change in Policy
Recently, applying for an Offer in Compromise arrangement became more difficult for some taxpayers. On March 27, 2017, the IRS began rejecting applications for Offers in Compromise submitted for taxpayers who have not filed all required tax returns.
Even if you have previously filed all required tax returns, you will not be eligible for an Offer in Compromise if you have not made all required estimated tax payments or if you are in an open bankruptcy proceeding.
Seek Legal Representation for Advice and Assistance
If you are concerned about being able to manage your federal tax obligation, an Offer in Compromise may be able to provide needed financial relief.
An experienced tax attorney can help you determine eligibility for the Offer in Compromise program, and can work with you to identify and evaluate other avenues that might be available to you. With more than 30 years of legal experience, Board Certified Tax Attorney Michael A. Lampert helps clients with a variety of tax, business, estate planning and administration matters, with an emphasis on tax controversy matters.
To learn more about Offers in Compromise, contact the Law Offices of Michael A. Lampert P.A. today in West Palm Beach, FL at (561) 689-9407.