Tax Attorney Adam Brewer discusses whether the IRS really settles tax debts for pennies on the dollar.
One of the most common questions I am asked is whether the irs really settles tax debts for pennies on the dollar.
If you own a tv then you have probably noticed the ads promising to settle your tax debt. There are a lot of misconceptions about tax settlements. Let’s take a minute to clear up some of the most common questions surrounding the much discussed tax settlement program — the Offer In Compromise.
The first question I am usually asked is whether you can really settle your tax debt. Most taxpayers are smart enough to know if its too good to be true it probably is. In this case, the answer is a resounding —— Maybe. There is a tax settlement program called the Offer In Compromise. To determine if you qualify we look at a number of factors, but the six primary things we look at:
- How much you owe?
- How long does the IRS have left to collect?
- How much are you currently earning?
- What are your necessary living expenses?
- What is the fair market value of your assets worth?
- How much are the liabilities on these assets.
Once we have this information we can determine if the irs is likely to accept an offer in compromise.
The second question I am usually asked is how much a taxpayer has to offer. That amount is generally determined by this equation:
(Income - expenses ) x 12 + assets - liabilities.
Finally, if an offer is accepted what happens next. If your offer is accepted you generally will have 5 months from the date of acceptance to pay the settlement amount. Once that amount is paid, then the remaining liability is forgiven and the IRS will release any tax liens within 30 days.
If you owe money to the IRS and would like to discuss an offer in compromise or other tax issues feel free to contact me using the form on this page or by telephone. Thanks again for watching.