Individuals who owe back taxes to the IRS and do not have the money to pay the total amount due may qualify for an Offer in Compromise. An Offer in Compromise is an agreement between the IRS and a taxpayer to settle back taxes for less than the full amount that is owed. An offer is generally accepted by the IRS when the taxpayer in debt has special circumstances and the amount offered is the reasonable collection potential. In other words, the IRS agrees that based on taxpayer’s circumstances, the amount offered is the most the taxpayer can be expected to have the ability to pay within a reasonable period of time. When calculating the reasonable collection potential, it is best to work with an experienced tax professional that knows all the procedures and details pertaining to any tax situation. For example, the calculation will include expected living expenses, and the amount the government allows for food expenditures may be increased for people that have special diets. Similar concepts apply to many other areas that could have major impact on the outcome of a case. A professional tax attorney, who is emerged in the field with extensive knowledge of all the requirements, can significantly increase the acceptance rate for Offers in Compromise.The Offer in Compromise is an extensive process that can take anywhere from six months to a year. An experienced tax professional can usually determine during the first consultation whether or not a taxpayer might qualify for an Offer in Compromise. Taxpayers who use tax professionals during this process highly increase their success rate and potentially save thousands of dollars in taxes, penalties and interest.
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