Question: I owe a several years of back taxes but do not have the money to pay the IRS. I want to get them off my back and heard of something called an Offer in Compromise. What is it and how can it help me?
Answer: An Offer in Compromise is the IRS’ tax resolution debt settlement program. It’s a program for taxpayers who owe the IRS more money than they can afford to pay. It’s the IRS’s version of a “fresh start” when it comes to tax debt. If approved, the IRS accepts a lesser amount (sometimes a fraction of what’s owed) to settle your debt. However, it isn’t always easy to gain approval due to its strict criteria.
The IRS considers your income, assets, expenses, ability to pay, and whether paying the full amount would cause financial hardship. It’s important to remember that the IRS wants its money and will only accept an Offer in Compromise if it thinks it wouldn’t receive any money otherwise.
Your odds for acceptance increase significantly when you have experience in negotiating with the IRS.