When you owe tax debt to the IRS, it may seem like an insurmountable problem. What many taxpayers do not realize, however, is that there are several potential alternative solutions available. One such alternative solution is to submit to the IRS an Offer in Compromise. An Offer in Compromise is an agreement between the taxpayer and the IRS that settles a tax debt for less than the full amount owed.
7 Items to Submit With an Offer in Compromise
In order to have your Offer in Compromise accepted by the IRS, you must demonstrate that it would be impossible for you to repay the full amount of your tax liability, given your financial situation. In order to do demonstrate this fact, you must submit all of the necessary information when applying. The following is a summary of the documents you will need to gather:
- Form 656, Offer in Compromise
- If you are requesting the Offer in your individual capacity, Form 433-A, Offer in Compromise, Collection Information Statement for Earners and Self-Employed Individuals
- If you are requesting the Offer on behalf of your business, Form 433-B, Offer in Compromise, Collection Information Statement for Businesses
- All required documentation requested on either Form 433-A or Form 433-B
- Form 656(s) for individual and business tax debt
- A non-refundable application fee
- An initial offer payment
It is important to note that if you are married and have joint tax debt as well as individual tax debt, both you and your spouse will need to send in a separate Form 656. One Form 656 would list all of your joint and separate tax debt, and a second Form 656 would list all of your spouse’s joint and separate tax debt. In addition, if you are unable to pay the application fee or the initial offer payment, you may be exempt if your household meets the Low Income Certification guidelines.
While submitting an Offer in Compromise may seem like an intimidating process, you are entitled to seek assistance from an experienced attorney. Even if you have already submitted an Offer in the past and been rejected, you can appeal that rejection and try again. We can help. We encourage you to learn more about the experiences of our past clients by checking out our client testimonials today.