Blog Post

Offer in Compromise

What Is An Offer In Compromise?

Offer in compromise is the name given to “making a deal” with the IRS. Most states have adopted this same name for their deal-making process.

The IRS accepts only one offer in three. Our firm’s percentage of acceptance is higher than that, but the process is time-consuming and treacherous. We also correct offers made by the high-volume firms, so we know how many errors are made in the offer papers.

How Do I Make An Offer?

offer-in-compromise

The offer-making process involves a financial statement which calculates your monthly disposable income. Then all assets are marshaled and a value assigned. The offer amount is then based on a combination of your monthly disposable income and your net assets.

Will My Offer Be Accepted?

We have found that very few people fill out the required financial statements correctly. These errors are one primary reason why an offer is rejected. The other major reason is the taxpayer’s income is too high for an offer.

As the IRS takes at least six months and sometimes longer than a year to complete their investigations and then to rule upon the offer, the financial statements must be correct from the beginning. And the taxpayer must be qualified.

What Should I Look Out For?

One can encounter two difficulties when making an offer: 1) The IRS has guidelines for allowable monthly expenses. The IRS may disagree with some expense such as the amount you pay for rent, or the cost of college tuition, and therefore reject an offer. 2) The IRS may think that your assets are worth more than they are, for example if you own your own business. If no compromise can be reached on the value, your offer will be rejected.

Can You Help Me With My Offer?

We do a number of offers every year. If you qualify for an offer, your offer will be handled by an attorney, not by a paralegal. You will have at least one conference with the attorney making your offer or arranging for payment. That attorney will be the person filling out the financial statements. And though we cannot guarantee that we will never make an error, your matter will receive the most serious and ethical attention. We intend to reach a settlement the first time we submit your papers.

If you make enough money in the eyes of the IRS they will not accept an offer. But if you have unusual expenses, such as a disabled child or spouse, or income not much greater than necessary living expenses, an offer may be right for you.