Do You Need an Attorney to File an Offer in Compromise?
In short, the answer is no. However, to file an Offer in Compromise you need to understand what you are submitting to the IRS, such as your income and expenses. You need to understand what forms to submit, payments, documents, etc. Failure to file in the proper order or missing a document or payment will cause your Offer to be returned or rejected without further review. You will then need to start all over with your resubmission and you have lost precious time in doing so.
All that being said, how do you know if you should even file an OIC? Here are some answers that could help.
- 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 taxe 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?
There have been 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, you may want to rethink your position.
If you are wanting someone to represent you, an Attorney is not necessary. However, you will need a Power of Attorney, which can be a CPA or Enrolled Agent versus an Attorney. In addition, you will want to find someone who is not only a CPA, Attorney or Enrolled Agent, but someone who also is a Certified Tax Resolution Specialist. To become a CTRS, a person must pass a series of tests to ensure they are educated in dealing with the IRS, that they understand how to best represent a taxpayer to ensure their tax debt is resolved in the best way possible to ensure it is resolved permanently!!