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Offer in Compromise and IRS: Common questions answered

We’ve been getting a lot of positive feedback lately on our common questions asked about IRS problems, so we figured hey why not one more?  So in this article, we’ll be answering some of the most common questions we are asked about the Offer in Compromise and IRS. We are going to keep the legal analysis to a minimum and try to use regular language.

Is the IRS Offer in Compromise program real or is it a scam?

It is real. Oh trust me the IRS Offer in Compromise program is real. But yes, a lot of scammy people have figured out a way to scam people out of money by promising them an IRS Offer in Compromise over the past 20 years. The big tax resolution companies are long gone, but there’s a lot of little ones making cold calls to people with federal tax liens and sending junk mail out and posing as tax attorneys. Honestly, they are quite obnoxious and the IRS does little to regulate them.

This is what you need to understand: Those people they left high and dry, now some of those Offers in Compromises didn’t work because the tax resolution companies they hired were incompetent at everything (except cashing a check), and some of those people didn’t qualify. And some of those people may have even qualified for a better deal with the IRS.


Can the IRS take my tax refund after I pay an offer in compromise?

Yes, the IRS is allowed to take your refund after your offer in compromise is paid and accepted.


How long does an offer in Compromise take?

See our article here  Offer in Compromise processing time. And a recent update: We submitted an Offer in Compromise in February, we just got accepted this week (June 25th). That’s a record for us, but not the norm.


What happens to an Offer in Compromise and IRS tax lien?

Once an Offer in Compromise is paid in full, the IRS tax lien that was filed against you will automatically be released. It typically takes about 2 months for this to happen. If the issue is time sensitive, there are other ways to get an lien taken care of.


Where do I find the IRS Offer in Compromise form?

The IRS Offer in Compromise form is right here on the website.


Can I prepare an Offer in Compromise myself?

Sure you can fill out an Offer in Compromise  yourself. The IRS Offer in Compromise booklet is right here. The IRS Offer in Compromise Manual is right here. The IRS even has an Offer in Compromise video right here. So why not save yourself a few thousand dollars by doing it yourself?

Probably the same reason you don’t perform open heart surgery on your cat.  Well, unless you don’t care too much about your cat (or you happen to be a veterinarian, I suppose). Getting it wrong can cause you an unbargained-for heartache.

And I say this as a huge supporter of cats, like Ms. Shubak here above.

This is the thing. Filling out an Offer in Compromise is not like preparing a 1040. With an Offer in Compromise, the IRS assumes everything you say is not true. Everything you say will be challenged. An Offer in Compromise is an audit of your income, your assets and your lifestyle.


How much should I offer the IRS for my Offer in Compromise?

As little as possible that will be accepted.

Technically that is determined by your “Reasonable Collection Potential,” or RCP. And your RCP is calculated by what you put down in your IRS Offer in Compromise Form 656. So the real question is what numbers should you put down in your IRS in Compromise Form 656? And that, that question can only be answered some someone qualified to assist you with an IRS Offer in Compromise.


What is an IRS Offer and Compromise?

There is no such thing as an IRS Offer and Compromise. It is called an IRS Offer in Compromise.


What are some IRS Offer in Compromise tips?

One is to be good for 5 years after Offer in Compromise acceptance otherwise the entire debt will come back. For more Offer in Compromise tips click here.


What should I do if my Offer in Compromise is rejected?

You have options. Read this article on what to do when your Offer in Compromise is rejected.


Can a running business file an Offer in Compromise?

Yes. An Offer in Compromise on a running business for back payroll taxes available but requires the skill of a tax practitioner at the top of his or her game.


Can I file an Offer in Compromise on trust fund taxes?

Yes, you can settle back trust fund recovery penalties with an Offer in Compromise.


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That’s it for now, I’ll be updating in the future.

  1. Shubak was not harmed in the writing of this blog. I did step on her tail on the way to my car this morning though. Not. My. Fault.

  2. I do not perform veterinary surgery on my cats but do prepare offers for clients. The ones who do it themselves invariably screw it up one way or another.

  3. I do not perform veterinary surgery on my cats but do prepare offers for clients. The ones who do it themselves invariably screw it up one way or another.

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