How to Make an Offer to the IRS

What happens in the event someone cannot pay the full sum of their taxes? This is something not many people think about. There are a few different options, such as just not paying the amount you owe and allowing your debt to continue to multiply or requesting a deadline extension to pay. However, neither of these options are a sustainable way to deal with this situation, if you do not have the funds to pay due to your financial situation. Working with an enrolled agent can prove to be a very helpful tool for those experiencing issues with paying their taxes. This is because they are federal tax agents who work closely with the IRS. They are able to help you settle your debts in ways that can actually help you overcome your debt, such as with an offer in comprise.

According to the IRS’s website, https://www.irs.gov:

An offer in compromise allows you to settle your 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 considers your unique set of facts and circumstances:

-Ability to pay;

-Income;

-Expenses; and

-Asset equity.

The IRS generally will approve an offer in compromise when the amount offered represents the most they can expect to collect within a reasonable period of time. It is important to explore all other payment options before submitting an offer in compromise. The Offer in Compromise program is not for everyone.

Doubt as to Liability — Debtor can show reason for doubt that the assessed tax liability is correct

Doubt as to Collectibility — Debtor can show that the debt is likely uncollectable in full by the IRS under any circumstances

Effective Tax Administration — Debtor does not contest liability or collectibility but can demonstrate extenuating or special circumstances that the collection of the debt would “create an economic hardship or would be unfair and inequitable.”

Sandra King is an enrolled agent, empowered by The United States Treasury to prepare your personal or business tax filing. You may learn more about enrolled agents in Treasury Department Circular 230(PDF). Before you call one of the large advertisers claiming to solve your problems for pennies on the dollar, take the time to talk to your trusted, local tax expert. We solve IRS tax problems locally and in every state.