Tax Tips
Offer in Compromise
By Michael Aston, E.A.
Alhambra Tax Center
Do you have a large IRS tax liability and there’s no-way you can pay the amount due? Try submitting an “Offer and Compromise.”
The IRS offers tax relief to those who are unable to pay. But … before calling one of the many ‘Radio and Television Commercials’ claiming they can save you pennies on the dollar – here’s some information you should know. And it may save you a lot of consulting fees and headaches.
The IRS has a new “Offer in Compromise Pre-Qualifier Tool” at the IRS.gov website.
This tool is a step-by-step application process to help Taxpayer’s find out if they qualify for an Offer and Compromise. As well as the amount the IRS will require when the application is submitted (part of the offer payment).
Once the pre-qualifier application is complete -- you either qualify or you don’t. The results and the recommended payments will show up immediately. And this is why we recommend using this tool to discover if you qualify before calling-up one of those Radio and TV advertisers.
It is very important that you honestly and accurately answer all of the questions. When the IRS gets the application, they’re going to verify asset and liabilities. If the IRS finds discrepancies in the application – the application will be rejected. And any payments that were submitted with the application (the offer) will not be returned and will be applied to the balance due.
Once the application is filled out and supporting documents are attached -- it’s time to mail the $186 application fee, the application, and a deposit of the offer payment. (The application fee and deposit may be waived for low-income taxpayers.)
Once mailed, it’s then a waiting game to find out if the IRS will accept or reject your offer. But as long as the application is 100% accurate … there’s a very good chance the application will be accepted.
The IRS has made the process easy that anybody can do it if the instructions are followed. The instructions can be found on the IRS website, “Form 656 Booklet”. If you are still confused after reading the booklet and using the pre-qualifier contact the IRS or a tax professional before calling the Radio and TV advertisers.