When you have serious tax issues, you need someone who knows tax law

Will an offer in compromise resolve your tax law issues?

More than 10 million people live in Georgia. Many of them are full-time residents who have fallen behind on their federal income taxes. Do you have lingering tax debt that is causing you worry and stress? If so, you’re not alone in the struggle. Tax law issues can have lasting and serious implications in your life, both financially and legally.

If you do not have a background in tax law codes, the thought of corresponding with the Internal Revenue Service (IRS) might be enough to make your blood pressure rise. This is especially true if you owe back taxes. Whatever the reasons are that you have failed to pay off your tax debt, the sooner you resolve the issue, the better. In such cases, an offer in compromise might be a potential solution to the problem.

Basic overview of offer in compromise for tax law issues

The term “compromise” refers to a means of settling a dispute between two or more parties where each party agrees to a concession to achieve a solution. A concession typically consists of giving up part of a demand or accepting a variation in the solution in exchange for something of benefit.  For example, if you and your spouse cannot agree on where to dine out for supper, you might agree to a compromise.

Perhaps you would agree to eat the main course at the restaurant of your spouse’s choosing provided you get to choose a different location for dessert. Regarding tax law issues, an offer “in compromise” is an agreement between an individual who owes federal tax debt and the IRS. If you owe back taxes, you might convince the IRS to accept a lump sum or installments settlement for a portion of the total owed in exchange for forgiving the rest of the debt.

Why would the IRS agree to a compromise?

Most taxpayers view the IRS as a money-hungry arm of the government that stops at nothing to collect debt. On the contrary, if there is a legitimate reason, such as those shown in the following list, the IRS is often willing to accept a compromise:

  • If it is unclear (due to codes or other tax law issues) exactly how much money you owe, the IRS might agree to an offer in compromise.
  • When a debt is not collectible (such as if you owe more than your income and assets combined), an offer in compromise might be a viable option.
  • The IRS might accept a compromise after determining that collecting the full debt would cause undue hardship on you or would be unreasonable because of extenuating circumstances.

To request an offer in compromise, you must fill out a specific application form and include the appropriate fees and payment if necessary. There are certain issues that would create exemption regarding application fees. Because tax law issues are complex, it is always best to seek experienced guidance before attempting to negotiate with the IRS.