Offer in Compromise Info/updates

At Tax Advocacy, LLC we have had numerous clients who have been unable to pay a 20% deposit on lump sum Offers in Compromise. This in turn prohibits them form submitting an offer thereby causing them continued stress and anxiety. The National Taxpayer Advocate's office has just issued the following statement regarding the 20% deposit requirement. They state that they want to"Make the IRS’s Offer In Compromise Program Accessible for Appropriate Taxpayers." A taxpayer who is unable to pay his or her tax liability in full may seek to compromise the debt by submitting an “offer in compromise.” The offer program is a good deal for both the government and the taxpayer. The government benefits because it frequently collects more than it would in the absence of the program and the taxpayer is induced to pay taxes on time and in full in the future; a taxpayer whose offer is accepted must remain fully compliant for five years or face reinstatement of the compromised tax debt. The taxpayer benefits because he or she is able to make a fresh start. Legislation enacted in 2006 requires taxpayers who submit “lump sum” offers to make a down payment of 20 percent of the amount of the offer with the submission. To determine the impact of this requirement on bona fide offers, TAS reviewed a sample of 414 offers that the IRS accepted prior to the enactment of the down-payment requirement. In about 70 percent of those cases, the taxpayer did not have access to sufficient liquid funds to make the required down payment. The National Taxpayer Advocate will work with the IRS and the Treasury Department to try to improve the accessibility of the offer program.

Hopefully they will implement the changes necessary to afford everyone the opportunity to resolve their tax obligations via the Offer in Compromise program. For additional information visit the IRS website @ www.IRS.gov, or www.taxadvocacyllc.com.