If you can demonstrate that you CAN pay back the IRS what you owe, you won't qualify for an Offer in Compromise (OIC). So what do you do then? Here's the crucial questions that WATAX engages with for the 40% of our customers that don't qualify to settle their IRS debt:
When does the Debt expire?
Does client meet the criteria for penalty waiver?
How do we avoid liens and levies?
When does the Debt expire? Remember, the Collection Statute Expiration Date (CSED) means that eventually your tax liability will expire. After it expires, you won't be required to pay it. Many payment agreements are reached for clients, but then intentionally defaulted as the CSED nears.
Does client meet the criteria for penalty waiver? If you have a legitimate story - death, sickness, divorce - and have a reasonable compliance history - not owing recent years - asking for penalty waiver is a great alternative to an OIC. Particularly, if you are able to pay what you owe.
How do we avoid liens and levies? Another way to ask this question, is what is the "right entry point" in your communication with IRS? Particularly, when the IRS is inconsistent in its operations (shutdown!). Debts below $50,000 can avoid tax liens if you get into a payment agreement. Levies can also be avoided if you act quickly to work out an an agreement. But the tax letters and your professional's understanding of how the IRS is functioning are your best gauge to make sure you act when you have to and to pay the least towards your debt before it expires.