Offer in Compromise IRS Tax Representation
There are many circumstances where we can negotiate of settlement of your tax debt for much less than the full amount. The procedure is to call an offer in compromise.
An offer in compromise is an offer that you make to the IRS to settle your tax debt for less than the full amount. The IRS will look at the liquidation value of your non-exempt assets and the excess income you have to pay your existing tax debt.
(Here is a brief clip on our offer in compromise representation services.)
We have the expertise to guide you through this process to achieve the best possible result. We understand how the IRS calculates the value of your tax debt so we can advise you regarding the best possible strategy. You may already have a tax lien or an IRS levy in place to collect back taxes, or you just are struggling to pay an IRS debt. Either way, if you owe the IRS more than $10,000 we can provide the tax help you need.
There are three categories of offers in compromise. These include:
- cash offers;
- short-term deferred payment offers, and
- deferred payment offers (which, in turn, have three payment options).
In each case, the IRS will expect the offer to include the “quick sale value” of assets. This is typically 80 percent of fair market value but will vary based on the type of asset. Keep in mind that selling cost and a quick sale would eliminate much of the equity you have in any real estate asset (e.g. your home).
The offer must also include a certain amount based on your excess income. “Excess income” is the income that is available to pay back taxes. It is your net income minus your reasonable living expenses. The amount the IRS will expect depends on the offer in compromise category (listed above) that you submit.
In a cash offer, the IRS will expect the offer to include 48 months of your excess income. In a short-term deferred payment offer, the IRS will expect the offer to include 60 months of your excess income. The full payment would occur later than 90 but within two years from the IRS acceptance of your offer in compromise. In a deferred payment offer, the IRS will expect the offer to include your excess income time the number of months remaining on the collection statute. The statute of limitations for collection on your tax debt runs 10 years from the date the tax debt was assessed, with some exceptions.
If your net assets do not exceed your tax debt, depending on the amount of excess income you have, the offer in compromise procedure can result in a substantial savings on your IRS tax debt.