When two parties are at a standstill regarding a particular problem, they may try to come to some kind of compromise that benefits them both. Compromise can come up in personal relationships, business matters and even when facing tax problems with the Internal Revenue Service. In fact, for Georgia residents struggling with back taxes, an offer in compromise may be worth looking into.
An offer in compromise can provide assistance by allowing approved taxpayers to come to a compromise with the IRS on the outstanding debt. This compromise typically involves the IRS agreeing to a settlement with the taxpayer that involves collecting less than the full amount owed. While this route may seem great, it is important to remember that an application is necessary and that fewer than half of these applications are approved by the IRS.
Some details to keep in mind when considering an OIC include the following:
- The outstanding debt must cause a financial hardship on the taxpayer.
- The IRS has other tax relief options that the taxpayer may qualify for instead, some of which are easier to obtain than an OIC.
- During the application process, the IRS will look at the applicant’s income, expenses, ability to pay and the person’s assets.
- A nonrefundable fee of $205 and a nonrefundable initial payment are required.
- A taxpayer going through bankruptcy cannot qualify for an OIC.
- The taxpayer must be current on filing all tax returns.
Even if an applicant is approved, that is not the end of the road. Initial payments must be made, tax liens can still exist until the offer in compromise is completed and the taxpayer must meet the obligations of the agreement. If Georgia residents are interested in gaining more information on this possible option, they may wish to discuss the matter with experienced tax law attorneys.