OFFER AND COMPROMISE ON YOUR TAX LIABILITIES

2007-03-08 10:33:40

( Legal )



Offer and compromise is an agreement between taxpayers and Internal Revenue Service to resolve debts of taxpayers. Internal Revenue Service can settle federal tax liabilities of taxpayers through acceptance of partial payments. Tax liabilities can be settled or compromised if there are doubts on the accuracy of the assessed taxes and on the ability of the taxpayer to fully pay the amount of tax owed. Also, you can avail of offer and compromise on taxes owed if you can demonstrate to the Internal Revenue Service that payment of taxes result to economic hardship or inequitable collection on your part.

Taxpayers should be vigilant on unscrupulous promoters who encourage them to avail of offer and compromise on taxes even if they don’t qualify under the program. Such promoters only charge high fees to these taxpayers. Offer and compromise is designed only for selected group of taxpayers who meet the requirements of the program.

Taxpayers who cannot pay their taxes in full can avail of other options to settle their taxes other than the offer and compromise option. They can avail of the monthly installments agreements with the Internal Revenue Service. Offer and compromise should be considered as a last resort for taxpayers to settle their tax debts.

Application Fee

Application fee is supposed to be paid by taxpayers applying for offer and compromise agreement with the Internal Revenue Service. Federal agencies apply such fee to recover the cost of providing services related to offer and compromise agreement which is not being availed by other taxpayers. Internal Revenue Service established this fee to recover the cost of processing and reviewing the tax offers submitted for compromise by taxpayers.

Mode of Payment

Internal Revenue Service only accepts checks or money order to pay the application fee. It should be made payable to the United States Treasury.

Offer in compromise on tax liabilities can greatly reduced a taxpayer’s liabilities. However, it can only be beneficial if the total amount of taxes owed is more than the amount of the total assets and excess earnings of the taxpayer.


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