Frequently Asked Questions - Offer In Compromise
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 OFFER IN COMPROMISE, REALLY?
An offer is your request for 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 advise. Knowing which forms to fill out will prevent the offer from failing the "processable" test. Some offers include taxes from the 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 IN COMPROMISE?
The IRS charges a non-refundable fee of $150 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 at http://www.taxproblem.org/irs-forms.html
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 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.
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