Can I file an Offer in Compromise when I am unemployed?
Or why settling back taxes is nothing like settling credit card debt
BY: THOMAS S. GROTH, ESQ (find Thomas on twitter! @tsgESQ)
So, you hear an ad on the radio, the voice is telling you that you can settle your credit card debt for less than what you owe. You think, “I’m unemployed, and I can’t pay, I should be able to get a pretty good deal on my own.” So you call your credit card company and you work out a deal! The bank will settle your debt of $19,566.00 for a one-time payment of $7,500.00! That’s less than 40% of what you owe. Well, who would pass up a deal like that? So you ask family and friends to borrow some money, and you cash out your 401k, and now you have one less thing to worry about once you become gainfully employed again. Success!
Then you start thinking, “I’ve been getting a lot of mail from the IRS, I wonder if I can work something out with them as well.” You’ve done your research, and you are aware that the debt settlement process with the IRS has a funny name, something called an “offer in compromise.” And so, now you’re wondering – “Is IRS Debt like credit card debt? Can I file an Offer in Compromise when I am unemployed?”
Do you want the quick answer or the complete answer? The quick answer is yes, nothing actually prevents you from submitting an offer in compromise when you are unemployed. But should you submit one? Well that’s a bit more complicated. Let me explain.
Solving an IRS tax debt is nothing like settling credit card debt — credit card purchases are voluntary. The IRS is not.