How do I Know When an Offer in Compromise Is the Best Solution? 5 top reasons.
- You could qualify for a currently not collectible status because you can pay very little or nothing. In an Offer in Compromise you must calculate your disposable income based on the national standard. If you have a low or no disposable income, you may be a candidate for an Offer in Compromise.
- You have minimal equity in assets. In an Offer in Compromise, you must determine the equity in your assets. You would have equity if after discounting the asset to the quick sale value (80%) and subtracting any outstanding loan, you still have equity in your assets. Most of your personal household goods and tools of the trade above a specific amount would be considered out of reach by the IRS. The value of retirement plans at 70%, less taxes to liquidate, would also be included. If you have a low or no equity in assets, you may be a candidate for an Offer in Compromise.
- You have considered how long an Offer in Compromise could take. An Offer in Compromise could take anywhere from 33 months to 48 months to complete in full before the debt is considered paid in full. If you have done the calculation of the possible time and can weather this storm, you may be a candidate for an Offer in Compromise.
- You have considered the remaining Statute of Limitations the IRS has left to collect the tax. The IRS has ten years to collect a tax liability. Submitting an Offer in Compromise extends the collection statute. If making payments over the remaining Statute of Limitation would cause you to pay less towards your overall tax debt, the Offer in Compromise may not be the best solution. If this is not the case, you may be a candidate for an Offer in Compromise.
- You have considered other options. Bankruptcy can eliminate certain tax debts if they qualify for discharge. It is extremely important to understand which debts qualify for discharge. If you have spoken to a Bankruptcy Attorney and the have determined the amount of dischargeable tax debt or that Bankruptcy is not the best option, you may be a candidate for an Offer in Compromise.
Should you get help?
I have seen many people try to prepare their own OIC and fail because they do not fully understand the art of dealing with the IRS. Yes, you can submit an Offer in Compromise yourself but if you are trying to considerably reduce your debt, I recommend you rethink your position.
An “accepted” OIC is not the same as a “successful” OIC.
There is more to it. Sure, the average taxpayer can fill out the forms and after spending hours reading and rereading the instructions provide the substantiation needed for an application to be accepted. How do you measure success? To me, success is measured with an approval on the LOWEST DOLLAR AMOUNT the IRS will accept.
If you feel that you may be in over your head, or just want to get a second opinion, let’s set up a short call. To avoid the back and forth emails and phone tag, I have included a link to my Calendar https://calendly.com/taxman/tax-problem-resolution-initial-consultation. Let’s set up a 30 min. phone conference to get to know each other. The phone number to call is 855-829-5877 and my extension is 203.