Saturday, June 7, 2008

Caution: "Pennies on the Dollar." - Part One

There seems to be a lot of companies out there offering taxpayers quick and easy settlements of their tax debt for "pennies on the dollar." This program is called an Offer In Compromise but is this really the best solution for your tax problem? The IRS warns us to check carefully before using this option to resolve your debt. There are specific circumstances where this is a viable option or it would not be available within the IRS tax code. However, it is not the "automatic solution" that these companies are trying to sell to taxpayers. Most of these companies DO NOT GUARANTEE an Offer In Compromise will be accepted by the IRS on your case...they simply charge large amounts of money from the taxpayer to simply submit an offer to the IRS on your behalf. Typically, there is little examination as to the taxpayer's current financial circumstances in order to determine whether a settlement is an available option or even the best solution.

The IRS does have the ability to agree to a settlement of a debt for less than the current balance in certain situations. The IRS only approves about nineteen percent of the Offer in Compromises submitted annually. In fact, the IRS resolves less than one percent of all balance due accounts through the Offer In Compromise program. This option can cost the taxpayer time and money and should only be considered after all other options have been exhausted.

If this solution is something you are considering you will want to check back over the next few weeks. We will review the specific circumstances and requirements for this program so you can understand if this program is right for your tax situation.

No comments: