How do ‘Offers in Compromise’ work?
2. How do ‘Offers in Compromise’ work?
Contrary to popular belief, the IRS does not have an “amnesty” program for those who owe back taxes they cannot pay. However, if you are current on filing your returns, they sometimes may be willing to settle for less than what you owe, if you meet the criteria for the Offer In Compromise (OIC) program.
An OIC is only feasible if you have access to funds that the IRS cannot otherwise touch, AND you would be unlikely to pay the taxes you owe within five years. In general, the sum of the resale value of any assets they can seize from you, plus the present value of the payments they could expect to receive from you for the next four to five years, would be the MINIMUM offer amount that they would likely consider. If you have an offer approved, you are also making a contract with the IRS that you will not be delinquent in taxes for any reason for the next five years; if you do, the offer is rescinded retroactively.
If you feel that you may qualify for an OIC, your best alternative is to contact Mr. Cohen and let him advise you. If you cannot afford to use a tax professional for guidance, call your local IRS office and ask to meet with someone to discuss the possibility of an OIC. You will need to provide the person helping you with copies of your most recent tax bills, plus complete financial information about your assets, liabilities, and current income/expenses.
The Internal Revenue Service receives in excess of 100,000 Offers in Compromise each year. Unfortunately, it rejects, or refuses to even consider, a very large number of these. The reasons range from gross inadequacy of the offered amount, to failure of compliance with filing or other rules, to simple procedural mistakes. Because of Mr. Cohen’s familiarity with Internal Revenue Service regulations as well as his years of experience in negotiating offers, the majority of the offers that he files for clients are processed and accepted. Mr. Cohen will not waste a client’s time or money by filing an offer which he does not expect to be accepted by the IRS.
There are a few new types of offers that are now being considered by the Internal Revenue Service. They will now accept long-term deferred payment offers, as well as those involving unusual hardship. After Mr. Cohen reviews a client’s situation and history in detail, he can evaluate whether or not a client is a good candidate for an offer, and approximate the amount to offer under the formulas being used by the IRS.
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