For taxpayers who are in debt to the IRS and are unable to pay in full, an Offer in Compromise may be a viable solution. The Offer in Compromise is an agreement between the taxpayer and IRS to settle the debt for less than what is owed. It allows the taxpayer to have a fresh start and move forward from the burden of their debt, while allowing the IRS to collect the maximum amount possible. When an Offer in Compromise is accepted, it is important not to do anything to jeopardize it.
4 Important Tips About an Offer in Compromise
Unfortunately, some taxpayers do not realize that their obligations to the IRS with regard to taxes continue even after an Offer in Compromise is accepted. Not honoring those other obligations can put the Offer itself in jeopardy. The following is an overview of important facts to remember:
- When submitting your Offer in Compromise, complete all required forms and send in all supporting documentation. This includes the application fee and the initial offer payment. If you cannot make these payments, determine whether you meet the low income certification guidelines.
- If your offer is accepted, continue to file and pay your tax obligations as they accrue.
- Failing to pay the tax obligations that become due during the five years after obtaining an accepted Offer in Compromise may force the IRS to default your Offer.
- If your Offer in Compromise is deemed to have been defaulted, all of your compromised tax debts, including penalties and interest, will be reinstated.
An Offer in Compromise is an important alternative solution to unpaid tax debt for many taxpayers. To get started learning more about your options when dealing with a tax problem, we encourage you to check out our free guide, The Ultimate Guide for IRS Problems.