File an Offer in Compromise on 941's?

In our 30 plus year history -- we at Washington Tax Services have had changing viewpoints around the IRS Offer in Compromise program as it relates to open corporations who owe the IRS. Previously - we were very skeptical about an open corporation filing an Offer in Compromise on unpaid 941 taxes based on what we saw from the IRS. In fact - very recently - we discouraged companies from doing Offers --almost unequivocally. Well -- based on some new attitudes we have seen from IRS agents in the field: we are now...doing Offers - albeit limitedly -- for some corporations on their 941 payroll taxes.

Well -- like any Offer in Compromise -- your business will qualify for this procedure if you can clearly demonstrate an inability to pay back the debt! As written on our other blog: Offer in Compromise Rule Changes for 2012 the IRS Offer rules changed dramatically in 2012. The IRS has reduced the disposable income required in an Offer from 48 months to 12 months. These rule changes significantly reduced what you are required to pay in Offer -- if you qualify.

While most 941 payroll tax cases are still resolved thru payment plans and penalty abatements and/or dissolution of your entity, the Offer in Compromise program is increasingly being used as an option for companies that owe 941 taxes.