An offer in compromise is a potential option for individuals who are unable to pay their tax debt in full. It allows them to propose a settlement amount that is less than the total amount owed.
The IRS evaluates various factors, including the person’s ability to pay, income, expenses, and asset equity, to determine whether to approve an offer in compromise. It is important to meet certain requirements, such as filing all required tax returns, making estimated payments, and not being involved in an open bankruptcy proceeding.
If the IRS cannot process an offer in compromise, they will return the application and offer application fees while applying any offer payments to the outstanding balance. Payment options may include lump sum cash payments or periodic payments.
Low-income individuals who meet certain certification guidelines may be exempt from application fees, initial payments, and monthly installments during the IRS review of the offer.
If an offer in compromise is rejected, individuals have the right to appeal within 30 days using the Request for Appeal of Offer in Compromise, Form 13711. The IRS Independent Office of Appeals can provide additional assistance in the appeals process.
It’s worth noting that the specific details and procedures regarding offers in compromise can be complex and may vary depending on individual circumstances. Seeking the guidance of a qualified tax professional or attorney can be beneficial when navigating the process and ensuring the best possible outcome for your specific tax situation.