You may have heard a commercial or read articles online about the Offer in Compromise program. Getting an IRS tax debt settlement for "pennies on the dollar" is not as easy as many tax firms will have you believe. The reality is that almost all settlement offers are rejected by the IRS. Find out who qualifies for an IRS tax debt settlement, what is needed to apply, and what other options are available for tax relief.
Who Qualifies for IRS Tax Debt Settlement?
In order to qualify for an IRS tax debt settlement, you need to prove that you have no ability to pay your current tax debt in full or installments, and you never will be able to. You cannot negotiate for a lower payment. Getting an IRS tax debt settlement with an Offer in Compromise is all about numbers and the burden of proof. This is much harder than most people realize. Many things that you do not consider assets, the IRS believes can be used to pay your debt. Many bills that are important for you to pay, the IRS considers unnecessary.
How Do You File for an IRS Tax Debt Settlement?
In order to file for an IRS tax debt settlement with an Offer in Compromise, you need to complete the following steps:
- Obtain a Form 656-B Booklet.
- Complete Form 433-A for personal debt and Form 433-B for business debt.
- Complete the Form 656.
- Send the Form 656-B Booklet to the appropriate IRS address.
- Send a non-refundable $150 application fee and non-refundable 20% initial payment.
When completing your 433 form, make sure that you have plenty of documentation to support your numbers. Be careful not to leave anything out, understate or overstate anything, or accidentally enter information multiple times. Filling this form out incorrectly will ensure that your offer is rejected and may cause the IRS to levy you.
The Form 656 requires you and your spouse's name, contact information, and social security information. If you are trying to get an IRS tax debt settlement for a business debt, include all the business information and its EIN. Make sure to mark all of the tax forms and tax periods that pertain to what you are trying to get an IRS tax debt settlement for.
The IRS will want a detailed and reasonable explanation of why you are requesting an IRS tax debt settlement, what amount you are offering, and a payment schedule. You will be given no more than five payments to do this, and the IRS will reject an offer that stretches the payments out over years.
Tax firm ads promote getting an IRS tax debt settlement through Offers in Compromise to the point that it may seem like the only solution. This is far from the truth. There are many solutions that work for a variety of situations. These include, but are not limited to, the following.
If you owe less than $10,000, the IRS may be willing to work with you on getting into a better position with your tax debt. Higher tax debts should be handled by a tax professional. If you are wondering if you qualify for an IRS tax debt settlement or what resolutions may help you, consult a professional. Call (800) 590-4524 now or fill out the form below for a free tax debt consultation to discuss your chance of getting an IRS tax debt settlement! We'll only connect you with a tax debt relief company holding at least a B rating with the Better Business Bureau.
