Offer in Compromise
An Offer in Compromise is a negotiated settlement offer that is made to the Internal Revenue Service to reduce to the amount of your total tax liability.Offers in Compromise are both difficult and time consuming to obtain. Only about 20% of the Offers-in-Compromise that are filed each year are accepted; and, among those, the settlement amount will vary for each individual.
Our Offer-in-Compromise acceptance rate is higher than the national average; however, that is because we pre-evaluate the Offer-in-Compromise prior to its submission. If we do not reasonably feel we can settle the balance for less than the full balance due, we will not submit the Offer unless the client expressly tells us to do so despite our advice to the contrary.
There are 3 types of Offer in Compromises available.
- Doubt as to Liability. You are filing the Offer not because you believe that you owe the amount the IRS is telling you that you owe, but rather simply to get the liability off your record even though you have good cause to believe that you do not owe the liability.
- Doubt as to Collectibility. You recognize that you owe the full amount of the liability, but cannot afford to pay that amount - even if allowed to pay it off over a five year period.
- Effective Tax Administration. You recognize that you owe the full amount of the liability and could afford to pay the full amount of the liability, but for a good reason it would be unfair or inequitable for you to have to pay the full amount of the liability.
The settlement amount is based on a percentage of the equity in your assets plus your disposable income as calculated by IRS standards over a period of time.
If the IRS accepts the Offer, the Offer amount is typically to be paid within ninety (90) days of the Offer being accepted; however, there are Deferred Payment Offers available as well. The Short-Term Deferred Payment Offer is to be full paid within 24 months. The Long-Term Deferred Payment Offer is to be paid over the remainder of the collection period.
We typically submit Deferred Payment Offers only in instances where the Offer amount is going to be greater than $10,000 and will otherwise be outside the financial ability of the taxpayer to pay within a 24-month time frame.
An Offer-in-Compromise is a long-term commitment on the part of Tax Matters Solutions and the client as the Offer process takes between 9-12 months to complete. However, the length of time the Offer takes is significantly influenced by the amount of time it takes a client to bring his/her account into Current Tax Compliance and to gather the documentation required to be submitted along with the Offer. The faster your account is brought into compliance and the documentation provided, the faster your Offer can be submitted and negotiated.
Get a Free Consultation on how to resolve your offer in compromise problems by completing this 100% Secure Form.
