IRS' New Streamlined Offer in Compromise Program Promises Fresh Start, Less Paperwork for Taxpayers. Won't Be Around Forever!
The new program is available to self-employed taxpayers with gross receipts of $500,000 or less and no employees, wage earning individuals and the unemployed.
To qualify, you must earn $100,000 or less (total household income) and your tax debt must not exceed $50,000. If those criteria are met, the customary scrutiny the IRS applies to its offer in compromise applications (missing documentation or "critical perfection" of the application) will be somewhat relaxed.
The IRS will examine streamlined offers with greater reliance on internal research, telephonic communication and additional allowances for a taxpayer's expenses, i.e. less paperwork from the taxpayer. IRS Examiners are instructed to look for glaring evidence of an ability to full-pay the debt, but the formality and strict compliance requirements are lessened. However, as with most collection alternatives, you must not have any unfiled returns.
This program is great news for many taxpayers. An accepted offer acts as a contract with the government. If they accept your offer, the collection bus stops. If you got behind on several years of tax debt and have been swept under by the poor economy, you may get a clean slate.
This program is slated to end May 13, 2012. So, time is of the essence. There may be some tax planning that can be done to make sure that your offer fits the streamlined requirements without raising the higher levels of scrutiny involved in most offers. Call a qualified, local, licensed lawyer to assist you in this process.