IRS Question Corner

Question: I’ve heard people talk about an Offer in Compromise. I find it really hard to believe that the IRS offers this type of program. I owe about $112,000 in back taxes — a mixture of personal taxes and payroll taxes from my failed business. A program like this would help immeasurably. But, c’mon, does it truly exist or is it just a marketing ploy?

Answer: Oh, believe me, the Offer in Compromise program really does exist. Not everyone qualifies, but those who do can oftentimes reduce their tax debt by pennies on the dollar.

Here’s what would happen: You would first consult with a qualified tax professional, who would then analyze your previous years’ returns to ensure that you are not paying even a penny more than you should. Once that is complete — and you and your tax professional know exactly what you owe in back taxes — you would set up a meeting with an IRS agent.

Now, as hard as it may be to believe, IRS agents are open to Offers in Compromise. Why? Because they’ve already spent years chasing deadbeat taxpayers who never pay a thing. One who comes forward, like you, is often welcomed with open arms. At the meeting, your tax professional will propose a payoff amount — that is, the actual Offer in Compromise — that will satisfy your tax debt once and for all.

Although every case is different, people are not lying when they tell you that the final compromise amount can be pennies on the dollar. It’s absolutely true! Of course, as I said, not everyone qualifies. If you’re living in a multimillion-dollar beachfront home, driving a brand-new BMW, and vacationing in the South Pacific every winter, you will most likely not qualify. But if you do not in fact have the resources to pay the tax debt you’ve amassed, the Offer in Compromise program will likely be for you.

Please give me a call to set up your initial appointment. For a free, no-risk consultation, call my office at 410-727-6006.