IRS GOV -- IRS Offer in Compromise -- Who is Qualified -- Who Can Settle for Less






With our current weak economy in a constant state of turmoil, many taxpayers have been living with anxiety and agonizing over their delinquent tax liabilities. If the amount of your back tax debt is unmanageable, you may feel scared, overwhelmed and helpless. You may feel as though you will never be able to pay the IRS the back tax debt owed. Fear of a Federal Tax Lien, fear of a levy against your assets (wages, salary, commissions, bank accounts or Social Security) may leave you paralyzed. 

You may fear, with justification, that an IRS Revenue Officer may soon be knocking on your door. Maybe one of these events has already taken place causing you an inordinate amount of stress and financial difficulties.

You may have heard a radio sopt or have seen a TV ad touting "Step right up. Pay the IRS pennies on the dollar and get rid of your back tax debt." This sure sounds good, doesn't it? An IRS solution is at hand. If you are smart, you will be skeptical. 
  1. Does the IRS really settle and compromise with taxpayers? YES.
  2. Will the IRS really let you off the hook easily? NO. Not everyone is qualified and eligible for an Offer in Compromise.
  3. Who is paying for those "slick" radio and TV ads. You are with inflated tax resolution fees.
  4. Can these tax relief firms really help a struggling taxpayer that owes the IRS? Sometimes yes, sometimes no. It depends if the tax resolution is really interested in helping you or is more interested in collecting a fee from a taxpayer who is not qualified for an Offer in Compromise.
The Tax Relief Team at Flat Fee Tax Service, Inc. will educate you on the topic of "Offer in Compromise" so that you will know if your settlement Offer stands an excellent chance of acceptance prior to your engaging an IRS Tax Solution firm.


An IRS settlement through the Offer in Compromise program will allow a struggling taxpayer to settle their back tax debt for less than the full amount owed if the taxpayer cannot afford to pay the tax liability in full. Five (5) years ago the IRS issued a warning (R-2004-17) to taxpayers that they check the rules surrounding an Offer in Compromise before applying for an IRS settlement. The IRS Commissioner at that time, Mark Everson, stated "The Offer in Compromise program serves an important purpose for a select group of struggling taxpayers. But we, at the IRS, are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the programs requirements. We urge not to be duped by high priced promises."


Earlier this year, the current IRS Commissioner, Doug Shulman, expanded the Offer in Compromise program to include more struggling taxpayers. The IRS calls their new and expanded settlement program "Streamlined Offer in Compromise." Due to the economic times that we live in, the IRS caseload has exploded. More taxpayers than ever are struggling to keep up. 

As of right now, the IRS accepts 34% of all settlements through the Offer in Compromise program.


While 34% may seem small, it is up by 10% from 2 years ago. The IRS is still in the business of collecting money for the Federal Government. The IRS will reject every Offer in Compromise that does not have their "I's" dotted and their "T's" crossed. If you try and do the paperwork yourself, you could succeed but most likely you will fail. The IRS will not tell you why your Offer was rejected.

An Offer in Compromise is not a negotiation as you would a dental bill or a bank loan. The IRS has a complex method to tabulate what your Offer should be. If you are not "right on the money" and try to "lowball" the IRS, your Offer will be rejected. 

How to Determine if You are Qualified for an Offer in Compromise:
  1. If you are looking to do an Offer in Compromise for your payroll tax liabilities, forget about it unless you close out your business and your EIN. If you do that, your payroll tax debt will convert to personal income tax and you can do an Offer. Should you remain in business, the payroll taxes (940/941's) are considered a Trust Fund. They are made up of withholding taxes which was never your money, to begin with. The IRS doesn't take kindly to unpaid payroll taxes. If you have a choice, always pay your payroll tax liabilities before you pay your personal income tax debt.
  2. Determine the reason for your Offer in Compromise request. There are 2 categories that the IRS looks at:
  • Doubt as to Collectability - This means you don't have the money to pay the full balance due now, nor will you have it before the Statute of Limitations runs out. The IRS wants to close cases. You need to give the IRS every reason possible so that they will accept your settlement offer.
  • Doubt as to Liability - This involves various issues regarding your responsibility for the tax liability. As an example, you may be an Innocent Spouse (my crazy Ex owes the back tax debt, not me). There may have been changes to your tax return creating a new tax liability that are the result of an audit or other adjustments. You disagree with these adjustments but the Statute of Limitations to prove your case has run out. Or, it's simply too late to amend your tax returns.
A Word to the Wise. Stick to "Doubt as to Collectability"

The IRS will expect you to put your tax debt on your credit card if you have one. If you own property, the IRS will expect you to try and access a home equity loan should you have any equity. In today's economy a lot of people do not have a credit card with any available credit and as far as home equity loan is concerned, most homes are underwater or banks are not lending.

You will have to complete Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals. from this information it will be determined what kind of monthly payment you can make. This will tell the IRS how much you can pay before the Statute of Limitations runs out.

The IRS could declare you to be Currently not Collectible. This means that you will be left alone for 12 to 24 months. The Statute of Limitations will continue to run out and you will most likely never pay the full amount of your tax debt.

After 12 to 24 months, the IRS will send you a scary Notice which is designed to scare you half to death. This Notice is sent through the Automated Collection System (ACS) which is the IRS computer. This is designed to get your attention and for you to respond. Do so. The IRS is simply checking in and wants to know if you hit the lottery, received an inheritance or got that incredibly high paying job. If nothing has changed much, you will remain Currently not Collectible and you will be left alone again.

If you have been declared to be Currently not Collectible, we, at Flat Fee Tax Service, Inc., recommend that you file an Offer in Compromise.

I am Dave Rosa, the V.P. of Client Relations at Flat Fee Tax Service, Inc. I will be conducting your free and confidential consultation. During our evaluation of your IRS problem, I will go over your finances and at that time, we can determine if you are qualified and eligible for the Offer in Compromise program. If you are not qualified to settle with the IRS, I will advise you of such. Now, if you are not qualified for an Offer in Compromise, you may be able to reduce your tax liability by amending your tax returns or by eliminating the penalties that have been added through a Penalty Abatement. In other words, there is "more than 1 way to skin a cat."

  • Guided by our Christian Values
  • No Complaints
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A $290 retainer and 10 monthly payments of $170 per month will get all of your IRS work done. Stop an IRS levy and do your IRS settlement through the Offer in Compromise program for the fair and reasonable fee of $1990 total. You cannot beat that for value.






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  1. If you are struggling financially and owe the IRS more than $10,000, you really need to look at an IRS settlement through the Offer in Compromise program. You have Rights and you have Options.


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