Tax Debt Relief- Knowing about the Offer in Compromise

Just like death, tax payment is one of the immutable facts of human life. There are people who have ambivalent feelings when it comes to paying taxes. The money that is paid as tax by the tax payers is used by the government for a number of fruitful activities. Every citizen benefits from the money paid by taxpayers. However, there are very few people who actually relish the fact of parting with their hard-earned income. There are situations when taxpayers do not have enough financial resources to pay off their taxes and they get into tax debt.

What is an Offer in Compromise?

With an Offer in Compromise, the government hopefully accepts an offer of only a small portion of the tax that is owed by the taxpayer. Perhaps, the Internal Revenue Service even accepts as little as 1% of the total tax amount owed by the tax payer. The Offer in Compromise should not be considered a magical solution, though. There are several procedures and facts that need to be considered in order to make the Offer in Compromise a successful and viable option for taxpayers.

The Requirements

There is not a single individual who would not like to pay just a small portion of his or her taxes owed. Nevertheless, prior to jumping into the procedure, it is necessary to review the ones who actually qualify. Internal Revenue Service has laid forward just one or two qualifying situations and they are:

  • The IRS requires reason to believe in the fact that it will not be able to collect the total taxes owed at present or in the future.
  • Exceptional circumstances do exist making it economically difficult and unfair for people to pay off their taxes in full.

The Procedure

The ones who qualify for the Offer in Compromise should go for a formal procedure that is not free. They must get IRS Form 656 by paying $150 and also Form 433-A. Form 133-A is the Collection Information Statement. The application procedure takes around a year and there is additional information required by the IRS. This information includes vehicle registrations, bank records, pay stubs and other important financial information. The ones who are approved need to fulfill some other requirements as well. Government can even revoke the Offer in Compromise if certain requirements are not met by the approved individuals. Getting an Offer in Compromise from the Internal Revenue Service for paying large tax obligations is a time-consuming procedure but it is highly beneficial for the ones who are in tax debt.

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Government can even deny the Offer in Compromise if certain necessities are not met by the affirmed people. Getting an Offer in Compromise from the Internal Revenue Service for paying substantial assessment commitments is a tedious strategy however it is exceptionally useful for the ones who are in duty obligation.This data incorporates vehicle enlistments, bank records, pay stubs and other vital money related data.