Before you spend your money to settle your tax debt what you need to know first.

I have worked more offers in compromise to settle tax debt than I care to admit.

Being a former IRS agent teaching instructor I have looked and reviewed thousands of cases since 1973.

I am a true expert when it comes to settling tax debt. There are many misconceptions about settling your tax debt for pennies on the dollar with the Internal Revenue Service.

Everyone calls us wanting to settle their debt for pennies on a dollar.

You need to know there are very specific formulas that govern the tax debt settlement offered by Internal Revenue Service.

Before anyone filing offering compromises should walk to the IRS pre-qualifier tool to make sure they are a qualified candidate before giving anybody their money.

You can call us today and we will walk you through the pre-qualifier tool to find out if you are an eligible candidate to file the offer in compromise. At fresh start tax we do not take any client unless are a true candidate for the program.

Statistics for offers in compromise.

If you are thinking of settling your tax debt through the offer in compromise know that the latest statistics show that there were 77,000 offers in compromise filed last year and acceptance rate of 39% from average settlement of around $5000.

Keep in mind these are based on national averages and completely dependent on your current financial statement.

So, what is the Offer in Compromise

An offer in compromise allows you to settle your tax debt for less than the full amount you owe.

It may be a legitimate option if you can’t pay your full tax liability, or doing so creates a financial hardship.

IRS consider your unique set of facts and circumstances:

• Ability to pay;

• Income;

• Expenses; and

• Asset equity.

IRS  generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time. payment options before submitting an offer in compromise.

The Offer in Compromise program is not for everyone.

Make sure you are eligible to settle your tax debt

Before IRS can consider your offer, you must be current with all filing and payment requirements.

You are not eligible if you are in an open bankruptcy proceeding. Use the Offer in Compromise Pre-Qualifier to confirm your eligibility and prepare a preliminary proposal.

Submit your offer to settle your tax debt

You’ll find step-by-step instructions and all the forms for submitting an offer in the Offer in Compromise Booklet, Form 656-B (PDF).

Your completed offer package will include:

• Form 433-A (OIC) (individuals) or 433-B (OIC) (businesses) and all required documentation as specified on the forms;

• Form 656(s) – individual and business tax debt (Corporation/ LLC/ Partnership) must be submitted on separate Form 656;

• $186 application fee (non-refundable); and

• Initial payment (non-refundable) for each Form 656.

Select a payment option

Your initial payment will vary based on your offer and the payment option you choose:

• Lump Sum Cash:

Submit an initial payment of 20 percent of the total offer amount with your application. Wait for written acceptance, then pay the remaining balance of the offer in five or fewer payments.

• Periodic Payment:

Submit your initial payment with your application. Continue to pay the remaining balance in monthly installments while the IRS considers your offer.

If accepted, continue to pay monthly until it is paid in full.

If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer.

Understand the Settling Tax Debt process

While your offer is being evaluated:

• Your non-refundable payments and fees will be applied to the tax liability (you may designate payments to a specific tax year and tax debt);

• A Notice of Federal Tax Lien may be filed;

• Other collection activities are suspended;

• The legal assessment and collection period is extended;

• Make all required payments associated with your offer;

• You are not required to make payments on an existing installment agreement; and

• Your offer is automatically accepted if the IRS does not make a determination within two years of the IRS receipt date.

Settling Tax Debt + What You Need to Know First