An offer in compromise
(OIC) is one of the many ways to get out of a tax debt problem with the IRS. This
allows you to settle your debt for less than the full amount you owe. An IRS
tax lawyer will tell you that not all people can qualify for this, but the
option could be worth considering if you are in one of these situations:
You’ll
be broke if you pay off the full amount.
The IRS can be forgiving
when it comes to debt provided that you provide them with a valid reason. Being
broke is as good a reason as any. With the help of an experienced tax lawyer,
you can argue that due to exceptional circumstances, you will indeed become
broke if you pay the full amount. This could be referred to as “economic
hardship”.
There
is doubt as to collectability of your debt.
“Doubt as to
collectability” is a status that describes uncertainty of whether the IRS can
collect the tax bill from you in the immediate future. Such cases are usually
approved by the IRS, but this option is more difficult to pursue (hence the
need for a lawyer).
Filing
for Bankruptcy is not a valid option.
Filing for bankruptcy is
another effective way to eliminate taxes and stop the collection processes. It
also does not require negotiation with the IRS. If filing for bankruptcy is not
a valid option because the collection timeframe is ticking, OIC is the next
best solution.
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