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Tax Debt and Bankruptcy Blog

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By Michael S. Anderson of Anderson Tax Law logo for Arizona tax attorney Michael S. Anderson P.C.
  • Another Successful Offer in Compromise – $143,000.00 reduced to $22,913.00

    Antique_Mailbox-thumb-375x341-49286We received confirmation of another successful offer in compromise today.  Our client owed the IRS approximately $143,000.00 in income tax debt and was facing several years of installment payments before the IRS collection statute ran out.  He wasn’t a candidate for bankruptcy as the IRS had filed the returns in question before he was able to file his own.  This rendered the tax years non-dischargeable no matter the age.

    He was able to settle the debt for $22,913.00, a savings of about $121,000.00.

    The process from the time we started planning the case until acceptance was about 8 months.  The client is going to pay the amount in installments.

    This offer required some planning and effort prior to it’s filing as do most successful Offers in Compromise.  The Offer in Compromise system is not informal.  Settling debt with the IRS isn’t like settling debt with a credit card company. There are a number of laws and rules about who can file, when an Offer can be filed, how it is calculated, how to appeal, how far it can be appealed, and whether a bankruptcy is relevant to settlement.

    If you have serious tax debt, you need to speak to someone who will conduct a very thorough analysis of the tax history and your financial history before providing a formal opinion about your chances.  You also need to speak with someone who understands the rules so that you can do some “planning” if necessary in order to make the Offer work.