Apply with the new Form 656 A transaction offer allows you to settle your tax debt for less than the full amount you owe. It can be a legitimate option if you can't pay your full tax liability or if doing so creates financial difficulties. The IRS has the authority to cancel all or part of your tax debt and reach an agreement with you for less than you owe. This is called a compromise offer or OCI.
The IRS will sometimes consider an agreement that allows you to pay a reduced amount of what you owe in back taxes, which is called a transaction offer. You must convince the IRS that you cannot pay what you owe and offer to pay the reduced amount in a lump sum or in short-term installments. When evaluating your application, the IRS will consider your net worth and your sources of credit, such as credit cards and home equity lines of credit. They may have equity in assets or future income that can pay their tax bills before the tax collection law expires.
Some think that the IRS will take a percentage of the bill or waive penalties and interest in a settlement. Individuals and companies with outstanding tax balances can face severe penalties from the Internal Revenue Service (IRS), including the possible seizure of personal or business assets in some cases. If you meet the borrowing criteria and have filed your previous tax returns, the IRS will use a formula to arrive at a monthly payment. Any tax agent who doesn't ask a client why they owe money to the IRS is not carrying out all the due diligence process that would be required for a proper appeal.
This deadline is called the collection law expiration date and usually elapses 10 years after the IRS charges (or “evaluates”) your taxes. Most firms that specialize in tax settlements claim to have a litany of tax experts at their disposal who are former IRS employees who can fight for their clients. The right direction is to resolve the problem by filing current tax returns and establishing a potentially longer-term plan to pay back taxes owed. However, there are many success stories available for taxpayers who want to reduce their tax liability and also participate in the commitment offer program.
While there may be a few lawyers and a handful of people at the company who worked for the IRS at one time, most employees probably haven't. This publication will discuss exactly how the IRS establishes eligibility for the commitment offer program, as well as how it determines the minimum offer you can accept. If you can offer reasons why you simply can't pay your taxes now, the IRS can suspend your case and label you as currently uncollectible. He has been a leader in helping taxpayers and tax professionals resolve tax issues with the IRS, where he worked for 19 years in various compliance positions.