Facing a tax debt is never a pleasant scenario. The IRS can become an intimidating presence in your life when it determines that you owe money in unpaid taxes. Fortunately for taxpayers, there are often alternative solutions that are available to help relieve the burden. One such example is to reach an offer in compromise with the IRS. An offer in compromise is an agreement between the taxpayer and the IRS to settle the tax debt for less than the full amount owed. In some cases, the offer in compromise is submitted when there is legitimate doubt that all or part of the tax debt is rightfully owed.
Three Tips for Determining the Amount to Offer
After exploring this option, you may decide that you want to move forward with trying to reach a compromise with the IRS. An important step in this process is determining the appropriate amount to offer as a settlement. The following rules of thumb can serve as your guide:
- The amount of the offer should be based on what you believe is the correct amount that you owe.
- Your offer must be more than zero.
- If you feel that you do not owe more than zero, you should consider other alternatives before sending in the Offer in Compromise, Doubt as to Liability form.
Ultimately, pursuing an offer in compromise is something that should be undertaken with the assistance of an experienced tax advisor. He or she can help ensure that you offer the appropriate amount, that you submit the proper supporting documentation, and that you are choosing the alternative solution that makes the most sense for your individual tax problem.