The key to a successful Offer-in-Compromise (“Offer”) is the associated financial analysis. This analysis is performed before the Offer is filed to ensure the taxpayer is likely to qualify based on the standards used by the Internal Revenue Service (“IRS”). A financial analysis performed thoroughly and properly can optimize the taxpayer’s chances of having the IRS accept the Offer.
IRS standards: Get the numbers right
Some tax professionals opt for negotiating tax settlements without knowing much with the client’s financial condition. The IRS, however, performs a financial analysis based on its established criteria to assess whether it should accept an Offer. This analysis takes into account the taxpayer’s assets and income to allow the IRS to determine what is the taxpayer’s capacity to pay the outstanding tax debt amount over a number of years. The IRS approves Offers that meet its own standards. Offers that do not meet the IRS criteria get rejected.
Save your time and money
Filing an Offer without knowing whether or not the IRS will accept it is a waste of the client’s time and money. If you are not a good Offer candidate, you may wish to find out before the Offer is prepared and filed. Instead of waiting to hear back on a rejection and hope to get a second chance, you can use your time and money to resolve your tax debt at the outset.
Tax complexity itself is a kind of tax.
Galina "Allie" Petrova is a Tax and Business Law attorney based in North Carolina. If you have any issues with tax debts or are facing other tax problems, please feel free to contact Petrova Law directly. Call to set up an appointment in our Greensboro office at 336.310.1210.