During the past 5 to 10 years there has been a proliferation of enrolled agents (former IRS agents) and lawyers (some that were former IRS agents as well) who specialize in IRS debt negotiations or as the IRS likes to call them as IRS offer and compromise programs. We are certain you have seen the commercials on television advertising their services.
We always suggest to our clients that if that if they have back taxes that due, similar to their credit card debt, that they hire one of these companies to see if they can be helped as well. Our understanding however is that unlike credit card
negotiations, tax compromises are not as easy. The IRS, being the big government entity that it is, will exhaust every means possible BEFORE they are even willing to consider an offer-in-compromise plan from the agent and his/her client.
In addition, there is no such thing as a “guarantee” that the offer-in-compromise will be accepted by the IRS. Remember, they have a tool at their disposal called a “skip trace”. A skip-trace for lack of a better work, can locate every single dollar you own or owe, with every bank, investment firm and off-shore account there is. Therefore, be completely honest when filling out the mandatory forms the IRS or its representative will give you. Failure to give completely honest answers here will almost certainly jeopardize your chances of even being considered for an offer-in-compromise. The three main reasons the IRS may consider an offer-in-compromise in your situation
- There is real doubt about whether or not your taxes ever can be collected given
- The IRS may have made a mistake. Therefore, there is the benefit of the doubt that
you the taxpayer may not owe the money that the IRS states that you do owe.
- Exceptional circumstances, such as poverty, may preclude the taxpayer from being
able to pay the best that is owed.
Finally, like everything else that has to do with the government, there may be certain jurisdictions, districts, or administrators in certain parts of the United States whereby, due to the political nature of that jurisdiction, simply will not even look at an offer-in-compromise. Since you do not know if you fall into one of these categories, it is virtually impossible to know for sure if you will be even considered in these areas of the U.S.
Our suggestions is to talk to several enrolled agents in your area first, before putting any sums of money down towards the “promise” of something that will not happen no matter what. Remember, the IRS is patient, and because the can charge you compounded interested on a daily basis, is not the least bit concerned about when they will get their money. They just know that over time, they will eventually get it.
If you would like to know more about the IRS offer and compromise program call Nationwide Debt Reduction toll free at 1-800-890-6658 between 8:00 am and 5:00 pm PST.