Generally, the IRS will only settle for what it thinks it can afford. To determine this, you will consider your assets (house, car, etc.) The IRS has the authority to cancel all or part of your tax debt and settle with you for less than you owe. This is called a commitment offer or OIC. Self-employed individuals or other non-salaried employees are typically responsible for making the estimated tax payments required during the tax year.
In addition to your financial statement, there are other factors related to your tax payment history that the IRS will consider when evaluating your request for tax relief. If you qualify for a commitment offer, the IRS can agree to a tax settlement for less than you owe, so that instead of paying the full tax debt initially recorded on your tax bill, you can agree to pay the most manageable amount of the agreement. Employers must file the required federal tax deposits for all employees on a monthly or biweekly basis, including federal income tax, Social Security tax, Medicare tax, and taxes on all wages, tips and other forms of compensation. While it's beneficial for tax relief companies to be on your side when negotiating a negotiated amount with the IRS, their expenses can outweigh the cost savings they generate when managing customers with small financial debts with taxes.
However, if the amount of your tax bill is higher or if you are concerned about a tax audit, you should seriously consider working with a tax lawyer or a tax relief firm that has tax lawyers on their team. In some cases, an OIC is returned to the taxpayer instead of being rejected, because the taxpayer failed to submit the necessary information, filed for bankruptcy, did not include the required application fee or a non-refundable payment in the offer, did not file the required tax returns, or did not pay their current tax obligations at the time the IRS is considering the offer. On the other hand, if you are concerned about receiving a tax audit or if your tax bill is substantial, a tax lawyer can provide you with step-by-step instructions for negotiating your offer from the IRS until you arrive at an offer that the IRS accepts. This tax relief program is sometimes also called the government's tax negotiation program, because entrepreneurs and individual taxpayers who are struggling to pay their back taxes can agree to a tax payment so that they can continue paying their allowable living expenses.
If you're ready to find out if the IRS will settle your tax debt, the best strategy for understanding your financial situation and creating a practical plan for paying what you owe in taxes is to meet with specialized tax lawyers and other tax professionals. To be eligible for a commitment offer, taxpayers must meet the requirements of being up to date in filing their tax returns and file all estimated tax payments, not be involved in an open bankruptcy case and have a valid extension for the current tax year return. While a tax professional can be useful, the cost of incorporating a professional tax relief company is likely to outweigh the savings you could achieve through an agreement. The Offer in Compromise program is a powerful tax relief program designed by the IRS to reduce the tax liability of entrepreneurs or individual taxpayers who fight against them.
Because tax payments aren't withheld from their paycheck like a salaried employee, they must make their own tax payments during the tax year as they earn or receive income. To qualify for an OIC, the taxpayer must have filed all tax returns, received an invoice for at least one tax debt included in the offer, have made all the estimated tax payments required for the current year and, if the taxpayer is a business owner with employees, must have made all the required federal tax deposits for the current quarter and the previous two quarters.
