What is the Offer in Compromise program and would I qualify for it?
Question: I’ve heard a lot of inconsistent information, so give it to me straight, please: What is the Offer in Compromise program and would I qualify for it?
Answer: To answer your question, let me first give some background: For decades agents with the Internal Revenue Service chased deadbeat taxpayers, literally banging on doors to try to collect revenue for the U.S. government. In some cases, that hard-line tactic worked, but in many cases, it did not.
Over time, the IRS discovered that a kinder, gentler collection tactic can be just as effective, if not more effective. Enter the Offer in Compromise program. Many taxpayers were running from the IRS not because they didn’t want to pay but because they couldn’t pay.
The Offer in Compromise program is for these taxpayers. If for whatever reason you have amassed a substantial amount of tax debt but are not in a position — and likely will not be in a position in the future — to pay that tax debt, then you may qualify for the program.
Here’s how it works: The first thing you should do is consult a qualified tax professional. He or she will analyze your returns to make sure you are not obligating yourself to pay the IRS even a penny more than you owe. Once you and your qualified tax professional have determined the exact amount of your tax debt, you will meet with an IRS agent and negotiate a settlement agreement. This settlement agreement will be an amount you will pay that will eliminate your tax debt once and for all — and this agreement oftentimes amounts to pennies on the dollar.
For taxpayers who qualify for the Offer in Compromise program, it can mean the end of all of their IRS nightmares.
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