Submitting an offer in compromise is a great way to significantly reduce your delinquent taxes with the Internal Revenue Service. However, it is not as simple as filling out some forms. To be successful with an Offer in Compromise, you need to plan ahead and pay close attention to detail.
The first step to being successful is determining if you qualify for this program. I know this sounds simple enough, but determining your eligibility is not an easy matter. Since a person can take more than 20 hours to determine if they simply qualify for the program.
To determine if you qualify, you may need to complete IRS Form 433 or 433-A, and these forms can be time consuming. These forms will require you to disclose all of your financial information. This includes all of your bank account information, such as names, addresses, and account numbers for all of your bank accounts. Additionally, you must provide three-month statements on each account.
You will also need to disclose information about your vehicles, such as the VIN number, fair market value, and your auto loan balance. Also, if you own real property, you will also need to disclose the fair market value of your real property and the mortgage balance on your home.
This is just a sample of the information that must be provided to the Internal Revenue Service that they will use to determine if you qualify for the Offer in Compromise Program.
However, before submitting an offer to the tax authorities, you need to know whether or not you qualify because there are steps you can take to qualify.
For example, let’s take John Smith, who owes the government $ 25,000 in back taxes. John owns a home or has investments, but he has $ 23,000 in a savings account and a 10-year-old vehicle that has 128,000 miles. If John simply submitted an offer to the IRS with the above information, they would not approve the offer and would take the entire $ 23,000 from John’s bank account.
However, if prior to submitting the offer, John purchased a new vehicle for $ 30,000 using the $ 23,000 in his savings account and obtaining a $ 7,000 auto loan. This would allow John to protect a large percentage of his asset from the offering in a compromised calculation and John would be a more favorable candidate to be approved for an OIC.
Preparing a successful offer in compromise is time-consuming and technical in nature. If you have back taxes with the IRS and want to settle by making an Offer, you should seek the professional assistance of an experienced professional such as the author of this article.
