Pennies on the Dollar? Making a Deal with the IRS? You've Heard the Jingles on TV and Radio, but what's really important to qualifying for an Offer in Compromise with the IRS?
In our 30 year history, we've seen a lot of approaches, deceptive and otherwise, toward "selling" an Offer in Compromise, but what gets truly overlooked are the following key questions:
1. Can you Pay your taxes off before they expire? Back tax debts expire 10 years after they've been assessed. If you just filed 2016 and owe $50,000.00. that debt should expire in May 2027 roughly or in 120 months. Very simply: $50,000 divided by 120 months equals $417. If you have less than $417 in monthly disposable income taking in consideration the IRS standards/limits, then you pass the first test.
2. Do you have the Assets to Pay what You Owe? If your net worth exceeds what you owe then USUALLY that is disqualifying. However, IRAs and 401ks can be valued at 60%. Houses at 80%. And even if you have the home equity to pay off the IRS, you still MIGHT qualify if you can show you can't get access to the equity by getting two loan denials.
3. Are you current on your recent taxes? Ready to be current on taxes for the next 5 years? Getting an Offer in Compromise with the IRS means promising to pay your current and future taxes. If you are self-employed that can be tricky. Ready to get current on taxes for the year that you are in or prepare to roll in your unpaid recent taxes into a future Offer in Compromise?