There are different ways in dealing with a tax levy imposed by Internal Revenue Services (IRS), one of which is submitting an offer in compromise. This offer, when approved, allows you to pay less than what you should to settle your tax debt. However, such an offer isn’t submitted easily as it comes with eligibility requirements.
Because an offer in compromise is for taxpayers who don’t have the financial capacity to pay their debt in full, you need to ensure that you meet all its requirements. This is where you need a tax lawyer in Sacramento. Your lawyer can help get you through the entire process.
Factors the IRS Considers When Granting an Offer In Compromise
When determining how you can settle your tax debt using the offer in compromise, the IRS considers several factors such as your income, financial capacity to pay, asset equity, and expenses. The IRS usually gives such offers the greenlight when it will allow the IRS to collect the most from you in a certain period of time. This is why the offer in compromise sets eligibility requirements as it’s an option only for those in deep financial burden.
There are two ways you can pay using the offer in compromise. One is through lump sum cash, which requires you to pay 20% of your offer amount as initial payment. The remaining balance will then be settled within five payments. Period payment, on the other hand, lets you make an initial payment while you settle the balance through monthly installments.
An offer in compromise might sound and look complicated to you, especially if you’re not aware of tax laws. The good news is you can hire a tax lawyer so that you won’t have to do it yourself.