Any Truth To The Stories About Neglectful People Who Resolve Back Taxes For Pennies On The Dollar?

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Any Truth To The Stories About Neglectful People Who Resolve Back Taxes For Pennies On The Dollar?

Yes, there absolutely is. This is not just the essence of urban legend. It presents itself all the time through the use of a program that the menacing Internal Revenue Service, themselves, has devised to help delinquent tax payers settle back taxes. The program is known as an "Offer in Compromise", or more briefly an "OIC". The IRS has been known to accept as little as one (yes that's right, the digit "1") per cent of an amount due on a tax debt and call it square.

These OIC's are entirely up to the government's discretion, simply because there is no authorized right to have a legitimate tax bill abated by the IRS. That being said, the IRS must give a correctly delivered Offer fair consideration.

Consider the case of Henry who was living on a static income and found himself in default to the IRS to the tune of $13000. That's because a back tax bill can grow at a fast clip with all the additional fees, penalties and interest that they assign to it. These things take on a life of their own after a while. Henry did the smart thing and enlisted the help of a counselor to represent his case to the IRS. The settlement services advisor negotiated a huge reduction from the full amount of $13000, getting it whittled down to a manageable $2000! This was an amount that Henry could be financially able to repay and get back to his life without the IRS hounding him.

If this OIC option is starting to sound like it could be the ticket for you, keep in mind that merely wanting to cut a deal with the IRS is not adequate of a basis. After all, wouldn't everyman like to have his or her tax bill decreased? You first have to measure up for an Offer in Compromise by showing the IRS that one of these conditions exist:

What the IRS calls "Doubt as to Collectiblity". Plainly put there is some doubt as to whether they can collect the debt from you.

"Doubt as to Liability". There is some rational question as to whether you owe the tax bill at all. This one is highly unusual.

Lastly, due to some extenuating circumstances, the payment of the full tax bill would cause you an economic difficulty or would be unfair or inequitable.

The end result here is if you think you might qualify for one of these juicy reductions in your back tax debt, you should get professional help in making the call, and if a good case exists, employ them to represent you before the IRS. This is not a thing you want to do on your own. The adage from the legal profession " he who acts as his own attorney has a fool for a client" would also apply in going before the Internal Revenue Service with an Offer in Compromise.

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