When you owe money to the IRS and you are unable to pay it in full, it is important to come up with an alternative solution to your tax problem. One example of an alternative solution is to submit an Offer in Compromise. An Offer in Compromise is essentially a debt repayment agreement between the IRS and the taxpayer, where the IRS agrees to let you pay less than what you owe if you can demonstrate that you’d never be able to realistically pay back the full amount. As the party requesting the compromise, it is your responsibility to come up with a compromise amount.
6 Financial Details You Need to Calculate an Offer in Compromise Amount
When calculating a proposed Offer in Compromise amount, it is important to have your financial data on hand. You’ll need to gather the following:
- The amount of cash you have available
- The total value of your investments
- Your total available credit
- The sum and value of your assets
- Your income amount
- Your total debt amount
While it may be tempting to offer the lowest possible amount, be aware that the IRS can reject your application if it believes you could pay the debt in full either through a lump sum or an installment agreement. Therefore, you are best served by proposing an amount that you can reasonably anticipate being able to pay that covers as much of the tax debt as possible.
Our Experienced Tax Attorneys Can Help You Prepare Your Offer in Compromise
If you still feel like you don’t know where to begin, or if you already submitted an Offer in Compromise and it was rejected, don’t lose hope of finding an alternative solution to your tax problem. Taxpayers can appeal that rejection and try again, and we are here to help. We serve taxpayers in Oklahoma and Texas, contact us today to schedule a free consultation, and be sure to learn more by checking out our client testimonials.