Offer in Compromise: Is the IRS Ready to Give You a Break?

Offer in Compromise: Is it Too Good to Be True?
Late-night television ads often make false promises of being able to pay off back taxes with pennies on the dollar. What they were referring to is called a offer in compromise. The Internal Revenue Service rules allow taxpayers to pay less than is owed when it is clear that it is not feasible for the taxpayer to pay the full amount. All the details of the program are included in the IRS’s booklet offer-in-compromise.
IRS Rejects Most Offer in Compromise Proposals
Traditionally, most offer-in-compromise proposals were rejected by the IRS. Yesterday, the Internal Revenue Service announced a new program, an expansion of its “Fresh Start” program, that will make it easier to have an offer-in-compromise accepted.
New Rules Make Offer in Compromise Easier
In general, the IRS looks at a person’s ability to pay taking into account both their current assets and future earning ability. The main changes in the program reduce the length of time a taxpayer will have to devote their future income to funding the proposed offer. Instead of having to devote a full five years of future income to the calculation of the proposed offer a taxpayer may be able to use only one year of future income.
New Offer in Compromise Guidelines
Another significant change is how a person’s disposable income will be calculated. The IRS uses a schedule of personal expenses called National Standards to calculate what a person’s reasonable expenses are. Then, those expenses are deducted from a person’s income to derive at the amount the IRS feels should be devoted to paying the tax liability. These National Standards are considered by most to be overly strict. The announced change liberalizes the standards and hopefully will be more economically realistic for the taxpayer.
Offer in Compromise Help
If you are faced with an overwhelming tax bill making an offer-in-compromise is just one option. There are a number of tools and approaches that can be used to solve financial problems. Feel free to give us a call at 480-820-0800 to learn more about how we can help you deal with tax problems and money trouble.
Original article: Offer in Compromise: Is the IRS Ready to Give You a Break?©2013 Arizona Bankruptcy Lawyer. All Rights Reserved.The post Offer in Compromise: Is the IRS Ready to Give You a Break? appeared first on Arizona Bankruptcy Lawyer.