Contemplating an IRS Offer in Compromise? 6 tips that will help your cause

Posted by Michael S. Anderson | Apr 12, 2013 | 0 Comments

If you have IRS tax debt you've been trying to figure out whether an IRS Offer in Compromise would work.

A basic understanding about how the IRS offer program works is easy to find, so here are a few things that you may not be as easily findable that may increase your chances of successfully completing an Offer.

1. Make sure you are currently withholding enough tax

If you are self-employed, you must make sure that you are making your quarterly payments correctly. If you are a wage earner, you should do a “fake” tax return and make sure you are withholding enough from each paycheck to guarantee you won't owe when you file the return next year.

If you don't make sure you are current, the Offer will be rejected. The IRS will think that the problem will continue and that you just can't follow the rules.

2. File all tax returns that need to be filed

If a return is missing from your history and the IRS is looking for that return, it won't consider the offer in compromise until the return appears in its basket.

You must find out which returns are missing, which returns the IRS cares about, create them and file them.

3. Prove your Case

I know…paperwork is a real pain. The key to a successful OIC is paperwork that is the proof you'll need at some point during the case though. So, take the time to get it right and gather proof of almost every budget item and income source you are using to make the argument.

4. Honesty

Dishonesty with the IRS is dangerous for reasons other than a lost Offer in Compromise. The financial statement you are filing is being provided under oath and you are subject to perjury charges if you intentionally leave something out or place something in that is false.  If you file a bankruptcy later, the financial statement you previously provided the IRS can be reviewed and issues can arise if something was input incorrectly on purpose or not.

The other problem with over-manipulation of the data is that it something won't make sense when the IRS looks at the big picture.

A common example of this is when the Offer filer provides a budget that is higher than her income. Either the calculation is wrong or something is rotten in Denmark. The IRS will figure out that someone isn't disclosing income from a side job and the case blows up or worse.

I tell my clients, “the financial statement has to make sense”.

The IRS is used to seeing financial statements and its employees can smell a rotten story from a few miles away.

5. Determine whether or not the debt would be dischargeable in bankruptcy

The IRS is required to consider the fact that it may get less if it rejects the offer and you file for bankruptcy. We will often work up a complete bankruptcy case and present it to the IRS during the Offer. This shows the IRS exactly what it will get if you file.

6. Cooperate

I know that the situation is aggravating and you will be working with government employees who are part of a giant machine. Most of them know it and are aware as well that you have been waiting months to get the situation resolved.

It will help your case as a result to simply…cooperate. Provide stuff. Explain stuff before it needs explaining.

If the person you are dealing with senses that you are a nice person and just want the law to provide you a way to move on with your life, it should…play in your favor.

Michael Anderson, Tax Lawyer In Arizona Michael Anderson, Tax Lawyer In Arizona Written By:

Anderson Tax Law 2158 N. Gilbert Rd. Ste 101 Mesa, Arizona 85203

Phone: (480) 507-5985 Fax: (480) 507-5988 Email: [email protected] Website:

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.


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