I’m hoping to qualify for an Offer in Compromise due to effective tax administration. How do I show "economic hardship"?

When seeking an Offer in Compromise as an alternative solution to your IRS tax problems, in many cases you must demonstrate that paying your full tax debt will create an economic hardship. Proving an economic hardship requires you to meet certain factors. These factors are predetermined by the Internal Revenue Service.

Six Factors That Prove Economic Hardship

The following are factors the IRS looks for when evaluating your application for an Offer in Compromise based on effective tax administration and economic hardship:

  1. You have a serious illness that makes it impossible for you to earn a living.
  2. It is reasonably foreseeable that all of your financial resources will be used up paying for the necessary care and support that you require during the course of your illness.
  3. Forcing you to sell your assets to pay your tax liability would leave you unable to meet your basic living expenses.
  4. You suffer from a medical condition or disability that makes it impossible for you to earn a living, and all of your resources are spent paying for your care and support during the course of the condition.
  5. You are living on a set monthly income with no other means of supporting yourself, and your funds are exhausted paying for the care of your dependents.
  6. You are unable to borrow against the equity in your assets.

Seeking an alternative solution to your IRS tax problem is not an easy process if you do not have experience navigating this complex field. Fortunately, we are here to help. Check out our client testimonials page today to learn more about how we can guide you through finding a solution to your tax problem.