Randolph Law Firm, P.C.

IRS accepts offers in compromise where financial hardship exists

In the digital age the IRS has taken advantage of the Internet to better open the lines of communication with the taxpayer. Many different aspects of the tax laws and the IRS collection procedures are now set forth in consumer-friendly descriptions on the IRS web page. For example, for those in Nevada who want to know about offers in compromise, there is a helpful fact sheet that covers the highlights of the procedure and explains the requirements. Those persons owing significant tax debts that they can't possible pay in full may find that offers in compromise are the ultimate answer to resolve matters satisfactorily.

The internal procedure used by the IRS in deciding such applications are a mystery to some extent, which makes it frustrating for a struggling individual, especially considering the $186 non-refundable application fee. It's reasonably safe to say, however, that the more organized and comprehensive presentation, with supportive documentation, will have the better chance. A professional tax advisor can assist in the process and increase one's chances by adding their prior experience into the effort.

Offers in compromise can be made by small businesses as well as by individuals. Furthermore, one interesting aspect of the offer is that it becomes valid if the applicant doesn't hear from the IRS within two years of the application. When sending in the application, the applicant should include the initial payment to start the proposed tax payment plan. Then the taxpayer should send the proposed amount each month while the IRS is reviewing the application.

When the agency sees that the individuals or businesses are making the proposed payments during the review period that may tip the agency's action in favor of accepting the offers in compromise. But don't expect to be offered a spectacularly generous gift by the agency. Financial hardship is the key. Thus, the agency reviews the Nevada applicant's finances and goes along with something that is a maximum effort on the taxpayer's part under the circumstances.

Source: irs.gov, Offer in Compromise, No author, Jan. 14, 2014

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