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An offer in compromise could benefit those struggling with taxes

On Behalf of | Mar 24, 2021 | Income Taxes

Financial problems could make any Atlanta resident feel weighted down. When those issues relate to money owed to the IRS for taxes, it can seem even more stressful. After all, the IRS is a government agency and has the power to seize assets if balances are overdue. Fortunately, there are options like an offer in compromise that may be able to help with tax relief.

An OIC allows a taxpayer to settle his or her outstanding tax balance for a lesser amount than what is actually owed. However, this relief option is not available to everyone. In fact, approximately 33% of OIC applications were accepted by the IRS in 2019. Still, that does not mean that someone struggling to pay their tax obligation should dismiss this option outright as having the right help could make all the different in whether an application is accepted.

Of course, one of the biggest questions a taxpayer has is: How much will I have to pay? An OIC does not wipe out a tax balance entirely, and upon approval for an OIC, the amount a person will have to pay may depend on:

  • The value of the person’s assets, such as a house, car, retirement funds and other valuables
  • The amount of income the applicant’s household generates
  • The cost of the household’s reasonable living expenses

In some cases, an offer in compromise could allow a struggling taxpayer to pay only a fraction of what was originally owed. However, it is important to understand what the IRS is looking for in OIC applications and whether it could suit a person’s specific situation. Discussing this option with knowledgeable Atlanta attorneys could help interested parties determine whether this or another tax relief option could suit their needs.