Will the IRS Settle for Less than What is Owed?
An IRS tax settlement is when a taxpayer settles their back tax debt through one of the IRS programs. The IRS offers settlements to taxpayers that are struggling with their back tax debts or have valid reasons to abate their penalties. The IRS offers several different options for taxpayers to settle their taxes owed. The main factor the IRS takes into consideration when determining if you, the taxpayer, will qualify for a tax settlement is your financial situation. The tax settlement that a taxpayer qualifies for is dependent upon their unique financial situation. The IRS prefers individuals to pay their taxes owed in full, but they will make exceptions for certain circumstances.
THE IRS HAS EASED ELIGIBILITY
OFFER in COMPROMISE PROGRAM
“I’ve made a whole set of changes to the Offer in Compromise (OIC) program since I’ve been here to try to increase the participation rate, increase the acceptance rate, because it’s good for the tax system,” Doug Shulman, the IRS Commissioner said.
"There are a variety of things, all aimed at increasing acceptance rates for an Offer in Compromise, making it a user-friendly thing to apply for,” Shulman said.
“These changes to the Offer in Compromise program will help give taxpayers a fresh start,” said Doug Shulman, the IRS commissioner, in a conference call with reporters. These changes “are especially appropriate as the American people and small businesses are climbing out of the worst recession in a generation.”
YOU DON'T HAVE THE $ TO PAY
2. Doubt as to Liability - A legitimate doubt exists that the assessed tax liability is correct. Possible reasons to submit a doubt as to liability offer include: (1) the IRS examiner made a mistake interpreting the law, (2) the IRS examiner failed to consider the taxpayer’s evidence or (3) the taxpayer has new evidence.
3. Effective Tax Administration - There is no doubt that the back tax is owed and there is potential to collect the full amount of the tax owed, but an exceptional circumstance exists that would allow the IRS to consider an Offer in Compromise (OIC). To be eligible for an Offer in Compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable.
If you are unable to pay your entire tax liability in a lump sum or through an installment agreement and you have exhausted your search for other payment arrangements, you are eligible and qualified for an Offer in Compromise.