Tax Problem Solver

Category: Offer in Compromise

Find out if you qualify to pay “pennies on the dollar” on your tax debt

  • Offer in Compromise IRS Tax Debt Program Updated

    If you owe tax debt that you are struggling with, take a look at the Offer in Compromise program. The IRS just released new guidelines that greatly reduce the amount that needs to be offered to settle your tax debt.

    An Offer in Compromise lets you settle with the IRS for a lower amount than what you owe. It is based on your current assets and income.

    Let’s go through an example to see if you might benefit. To start working with your own numbers, you can get a rough estimate using my Offer in Compromise Calculator.

    First, you need to gather your current assets. This will include all cash and investments on hand and the quick-sale value of the things you own.

    Next, we figure your disposable income. Add up your monthly income. Subtract your monthly living expenses.

    The IRS sets allowable limits for certain expenses, some of which are based on where you live and the number and ages of family members. Under the new guidelines, we can include credit card payments, bank fees, and some student loans. Also a percentage of back state and local taxes may be allowed. Previously, none of these expenses could be included in the Offer in Compromise calculations. By increasing the allowable monthly expenses, we decrease disposable income, thus decreasing your offer amount.

    Once we have your disposable income calculated according to the IRS regulations, we multiply it by 12 or 24 months depending on whether the offer amount will be paid within 5 months or within 6-24 months. This is a significant decrease. Previously, we had to multiply the income amount by 48 or 60 months.

    Let’s do some math and see how this might benefit you – If your disposable income came to $300/month, under the previous rules, the income portion of your offer would be $14,400 or $18,000. If your tax debt is less than this amount plus your assets, you would not qualify for an Offer in Compromise. If your tax debt was more than these amounts, you might qualify but would have to pay at least $14,400 to settle your debt.

    Under the new rules, in this same scenario, the income portion of your offer would be $3600 – $7200. That’s a big difference. This will make it much easier for struggling taxpayers to make an offer that they can afford and get out from under their tax debt.

    Try my updated Offer in Compromise Calculator to see if you qualify and what your settlement amount might be. Call me for a free consultation to discuss your options.

  • New Free Online Offer in Compromise Calculator

    We’re pleased to announce the release of a free online Offer in Compromise Calculator. While the calculations for an Offer in Compromise can be complex, this online version is a great starting point for taxpayers when deciding on a solution for their tax debt problems.

    The IRS has increased audits and other tax enforcement actions, and more taxpayers are finding themselves in a situation where they owe substantial tax debts. Penalties and interest continue accruing and many people find themselves in a difficult situation and needing guidance.

    TV commercials from dubious firms promise a magical “pennies on the dollar” solution to troubled taxpayers. Before speaking to a sales rep at one of these firms, they can get instant results about their potential eligibility for an Offer in Compromise.

    An Offer in Compromise is made to the IRS when a taxpayer owes more in taxes, penalties, and interest than they will be able to pay. They can offer to pay a portion of the debt and the remaining debt is forgiven. For many people in tax trouble, it is a life-saver.

    To see if they might qualify, users enter their assets, income, expenses, and tax debt into the free online Offer in Compromise Calculator. If the results show they would save on their tax debt by submitting an Offer in Compromise, they are encouraged to call me for a more detailed and accurate calculation in a free, no-obligation consultation.