The Internal Revenue Service’s Offer in Compromise program provides taxpayers with the ability settle their tax debts for less than the full tax liability. The Offer in Compromise program is available for both individuals and business/corporate taxpayers. The Offer in Compromise program can help taxpayers get a fresh start and stay in future compliance with their tax obligations.
The Offer in Compromise program uses IRS’s financial forms that help the taxpayer to determine their reasonable collection potential. The reasonable collection potential is based upon the specific taxpayer’s equity in assets and future income potential for a pre-determined period based upon the taxpayer’s payment terms for the Offer in Compromise. Although taxpayers can pay a reduced amount to settle their tax liability, taxpayers should not expect to pay pennies on the dollar.
While the Offer in Compromise program can provide taxpayers with a way to resolve their outstanding tax debts, taxpayers should also be cautious of the specific IRS rules regarding the program. For example, taxpayer should note that the statute of limitations on IRS collection activity is suspended while an Offer in Compromise is pending. Additionally, once a taxpayer’s Offer in Compromise is accepted, the taxpayer must remain in compliance with all tax filings and payments for five years after their Offer in Compromise is accepted or the entire tax liability will return.
Longman & Van Grack’s Tax Litigation & Controversy Attorneys regularly represent clients in many different tax matters and are very familiar with the IRS Offer in Compromise program. We have multiple attorneys who are admitted to practice in the United States Tax Court and regularly practice before the Internal Revenue Service. Robb Longman and Sat Nam Khalsa have assisted many clients through countless tax matters. If you would like to contact one of our attorneys, you can reach us at (301) 291-5027.