Frequently Asked Tax Questions – And The Answers You Need From Joe Mastriano, CPA.

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IRS Offer In Compromise – Our Most Frequently Asked Questions From Our Clients!

HOW MUCH MONEY WILL THE IRS ACCEPT IF I DO AN OFFER IN COMPROMISE?

It depends on the facts. — See Offer In Compromise (Please click for all offer questions).

MY HUSBAND / WIFE FILED FOR AN IRS OFFER IN COMPROMISE.  AM I STILL LIABLE FOR THE TAX?

Yes you are. — See Offer In Compromise (Please click for all offer questions).

WHAT IS AN IRS OFFER IN COMPROMISE, REALLY?

An offer is your request to the IRS to accept less than the amount of taxes they claim you owe. You may not really owe it or all of it. You may agree that you owe the debt, but can’t pay in full. Or you may agree that you owe the liability, but paying it will cause an economic hardship. Offers are submitted on IRS form 656.

WHAT FORMS DO I FILL OUT TO APPLY FOR AN OFFER?

You will fill out a combination of form 433a and 433b and the offer form 656, as the instructions instruct.  Knowing which forms to fill out will prevent the offer from failing the “processable” test.  Some offers include taxes from individuals and some that are joint. A married couple may have to fill out three 656 forms!

DOES THE IRS ONLY APPROVE A FEW OFFERS A YEAR?

The IRS usually only approves less than 20%. That’s why it is essential that people fully understand the process before submitting an offer. Please click the “Home” tab at the top for more information on our services.

CAN AN OFFER BE SET UP WHILE I AM IN A PAYMENT PLAN?

Yes, as long as you qualify. There is no restriction that says you must not be in a payment arrangement to do an offer.

HOW LONG DOES IT TAKE TO GET AN OFFER APPROVED?

This is not a fast process. It can take from a few months up to two years. After all the work preparing the offer, the processing will take time, and then finalizing will take time.

It can be frustrating to wait for the IRS to settle your offer.

HOW MUCH DOES IT COST TO FILE AN OFFER?

The IRS charges a non-refundable fee of $150.00 for the processing. This fee can be waved if you meet their low-income requirement. Submit form 656-A to request this. Please download the instructions for the form 656 on our IRS forms page.

WHAT IF I DON’T QUALIFY FOR AN OFFER?

You will have to negotiate an installment agreement for the taxes you owe. Some may already be past the statute of limitations for collections, making them dischargeable. They may also be dischargeable in bankruptcy. My site has a lot of information on bankruptcy, offers, etc. Check the “free advice” tab at the top.

CAN I REALLY PAY PENNIES ON THE DOLLAR?

Absolutely. Your offer is based on income and expense factors, not a percentage of the liability. If you are poor enough, and don’t have much hope for additional income, or it is likely that you don’t owe the taxes the IRS is claiming that you do, then you can save a large amount with an offer in compromise.

WHAT MUST I DO TO KEEP MY OFFER SO IT ISN’T CANCELED OR REVOKED?

Please see my section on payment plans. The rules are the same. You must file and pay your taxes on time. You must make your offer payments timely. For a more exact description, please fill out the coupon on the right, and a page will come up explaining the rules you need to follow.

WHAT IF I BREAK MY OFFER AGREEMENT?

The full amount of the liabilities will be put back (minus any payments you made), plus all accrued interest and penalties. Your case will be sent back to the collection division so that they can start collection action again.

CAN I REDUCE MY TAX DEBT WITH OFFER? CAN I FILE AN OFFER IN COMPROMISE FOR MY IRS TAX DEBT?

Yes. Taxpayers can reduce their tax liability using Offer in Compromise. This payment option is a popular tax resolution programs the IRS offers. See Offer In Compromise.

HOW CAN I SETTLE MY IRS TAX DEBT FOR LESS? CAN I REDUCE MY TAX LIABILITY WITH OFFER?

See Offer In Compromise

WHO QUALIFIES FOR OFFER IN COMPROMISE? WILL THE IRS ACCEPT MY OFFER IN COMPROMISE? WHAT ARE THE CONDITIONS?

It depends on your unique financial situation. Because many people are seeking tax relief using Offer In Compromise, the IRS will not easily accept each offer received. The IRS carefully analyzes your case, and they will take a decision. See more on Offer In Compromise.

WHY SHOULD I HIRE A TAX PROFESSIONAL FOR MY OFFER IN COMPROMISE? WHAT IS THE ADVANTAGE OF HAVING A TAX REPRESENTATIVE?

Not everyone qualifies for an Offer In Compromise. There are many requirements a taxpayer must meet. The process can be long. Sometimes the IRS guidelines may be difficult to follow. A tax representative can provide you assistance with the forms and the dollar amount of the offer. He will know how to avoid the most common mistakes that taxpayers make causing their Offer in Compromise to be rejected. See more on Offer In Compromise.

WHAT ARE THE IRS GUIDELINES FOR OFFER IN COMPROMISE? WILL THE IRS ACCEPT MY OFFER IN COMPROMISE?

The IRS will want to examine your past and current financial situation to determine whether your Offer In Compromise will be accepted. See more Offer In Compromise.

I AM LOOKING FOR TAX DEBT SETTLEMENT! IS OFFER IN COMPROMISE THE BEST SOLUTION FOR MY BACK TAXES?

We can help you file an Offer in Compromise. We will make sure your offer is reasonable and acceptable. If the IRS accepts your Offer in Compromise, your back tax problems are almost solved. You will need to make the payments in time, and file and pay your taxes on time. See Offer In Compromise.

WHEN FILING AN OFFER IN COMPROMISE DO I HAVE TO REPORT MY FINANCIAL SITUATION TO THE IRS? DO I HAVE TO LIST MY INCOME AND MY EXPENSES?

Yes. Taxpayers are required to list their income and declare their living expenses. See Offer In Compromise.

I WANT TO SETTLE MY BACK TAXES USING OFFER IN COMPROMISE! HOW LONG DOES IT TAKE FOR AN OFFER IN COMPROMISE PROCESS?

It depends. Even if you will be able to prepare the forms and the other documents required for your offer relatively fast, it may take more than a year for the IRS to process your Offer In Compromise. See Offer In Compromise.

CAN I SETTLE MY BACK TAXES FOR PENNIES ON THE DOLLAR? WILL THE IRS ACCEPT MY OFFER IN COMPROMISE FOR PENNIES ON THE DOLLAR?

The IRS will analyze your Collection Information Statement and they will determine a reasonable collection potential. This is the amount of income the IRS considers you can afford to pay for your tax debt. Usually, the reasonable collection potential is calculated for the next 2 years. If you prove financial hardship and the IRS will accept your Offer In Compromise, you will pay less taxes, penalties and interest. See Offer In Compromise.

WHAT DO I NEED TO DO TO FILE AN OFFER? CAN I PREPARE OFFER  MYSELF?

When filing Offer in Compromise, you will need to at least prepare Form 433A and Form 656. If you decide to file Offer in Compromise without tax representative help, make sure you prepare all the forms and documents required. See more on Offer In Compromise.

WHAT SHOULD I KNOW ABOUT AN OFFER IN COMPROMISE CONTRACT? WHAT ARE THE TERMS AND CONDITIONS OF AN OFFER IN COMPROMISE?

You will have to pay the offer amount. The IRS will want to see that you file your tax returns on time and you pay your taxes too. See more on Offer In Compromise.

WHAT IF I DON’T QUALIFY FOR OFFER IN COMPROMISE?

You may qualify for an installment agreement. In seeking alternative methods of paying your tax debt a tax professional may be of great help. See Owing the IRS.

WHAT IS THE KEY FOR A SUCCESSFUL OFFER IN COMPROMISE?

It is very important to submit all the information that would sustain your offer. See more on Offer In Compromise.

HOW CAN I NEGOTIATE AN OFFER IF I CANNOT PAY MY BACK TAXES?

Let us help you. See more on Offer In Compromise.

HOW CAN I PROTECT MY RIGHTS DURING AN OFFER IN COMPROMISE PROCESS?

You may do research on your own or hire a tax professional. They can help you calculate the amount to offer.  They may be able to help you protect your tax refunds in an offer in compromise. See more on Offer In Compromise.

THE IRS WILL NOT PROCESS MY OFFER! WHAT ARE THE IRS REQUIREMENTS? IS THERE AN OFFER CHECKLIST?

Your Offer In Compromise will not be processed, for example, if you have a bankruptcy case open. You must have all your tax returns filed. You must include the application fee and Form 656 and 433 A, along with support documentation. See more on Offer In Compromise.

IF THE IRS REJECTS MY OFFER IN COMPROMISE?

Once your offer is rejected, the IRS can start collection action against you. Try to set up an installment agreement with the IRS. We can help you negotiate a manageable payment plan. Call us now at 713 774 4467!

WHAT CAN I DO TO PROTECT MY OFFER IN COMPROMISE FROM BEING REVOKED? IF THE IRS WILL REVOKE MY OFFER IN COMPROMISE?

You need to make sure you make the payments on time, you file your tax returns and pay income taxes on time. Don’t let the IRS reinstate the amount you owe, adding penalties and interest. They are entitled to begin collection action against you. See more on Offer In Compromise.

APPEALING A REJECTED OFFER IN COMPROMISE! HOW CAN I APPEAL AN OFFER IN COMPROMISE? IS THE IRS GOING TO RECONSIDER MY OFFER IN COMPROMISE?

You can appeal the IRS decision, sending a letter and requesting reconsideration of your offer in compromise. See more on Offer In Compromise.

WHY THE IRS REJECTED MY OFFER IS COMPROMISE? MOST COMMON REASONS THE IRS WILL NOT AGREE TO MY OFFER?

The amount of offer is too low. The IRS will send you a letter and let you know a reasonable amount they can accept. If you consider you can afford to pay, you may resubmit your offer in compromise. See more on Offer In Compromise.

TIPS FOR FILING AN OFFER! WHAT YOU MUST KNOW WHEN FILING AN OFFER?

Be honest in declaring your income and your assets. You may be audited, once the IRS starts reviewing your offer. Carefully fill out the IRS Forms. Sometimes the IRS rejects an offer in compromise because the forms were not filed out correctly. See more on Offer In Compromise.

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