Question: Why do some people qualify for the Offer in Compromise and others do not? If you don’t qualify, what options do you have?

Answer:  The Offer in Compromise is a unique program. To understand why the IRS uses it, I think it’s beneficial to understand the history.

For years, IRS agents found that chasing deadbeat taxpayers offered only limited success. The cat-and-mouse chase ultimately was costly to taxpayers, what with the manpower and research needed to track down delinquent taxpayers and force them to cough up what they owe.

Realizing that it was possible to generate the same, if not more, tax revenue using a kinder, gentler approach, the IRS developed the Offer in Compromise. It’s for taxpayers who are absolutely unable to pay their current tax debt. This could be due to losing a job or another unfortunate circumstance. While an Offer in Compromise can allow you to decrease your tax debt by pennies on the dollar, you must first be able to prove to the IRS that you otherwise can’t pay your tax debt. That’s the sticking point.

If you are overwhelmed with tax debt, I’d first recommend you talk to a qualified tax professional. He or she will analyze your situation and your previous returns and determine if you might qualify for the Offer in Compromise.

Now, if you don’t qualify, you still have options. Among them is the Installment Agreement, which allows you to pay off your tax debt over time, in a manner similar to the way you pay off a car loan or mortgage. The Installment Agreement is perfect for people who have the long-term ability to pay off their tax debt but who, at this time, simply cannot write a check for the lump sum.

Whatever situation you’re in, it’s important to remember you have options. Michael Rozbruch solve IRS problems like yours every day. Michael is an IRS Problem Solver. For a free, no-risk consultation, please contact Tax Resolution Services at 818-774-1813.

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This entry was posted on Thursday, September 25th, 2008 at 3:40 pm and is filed under IRS Times and Inquirer, Offers in Compromise. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.