How to Qualify for an Offer in Compromise
The Internal Revenue Service's Offer in Compromise program was established to be in the best interest of the taxpayer and the government. It promotes voluntary compliance with future tax payments and filing requirements. If you owe back taxes that you can not pay in full or pay by meeting the minimum payments of an established repayment plan, investigate if you qualify for an Offer in Compromise that reduces the total tax due and makes repayment possible.
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Things You'll Need
- Form 656-A Income Certification for Offer in Compromise Application Fee and Payment
- Form 656-B Offer in Compromise Booklet
- Application fee
- Supporting documentation
Instructions
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1
Review your tax payment options to determine if you have exhausted all of your available payment methods. You cannot have disposable income or assets that can be converted to cash in amount equal to or greater than the debt and qualify for an Offer in Compromise.
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2
Verify that you are not a debtor in an open bankruptcy proceeding.
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Enclose a check for the current application fee with your signed Form 656-A or qualify for waiving the fee by falling at or below the IRS Low Income Guidelines which are published in the Form 656-B Offer in Compromise Booklet.
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4
Complete a Form 656-B Offer in Compromise and attach all needed documentation.
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5
Submit a 20 percent lump sum payment or a periodic payment offer with your completed Offer in Compromise Application booklet and supporting documentation.
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Tips & Warnings
Review and verify all of the answers and documentation thoroughly before submitting.
Copy all forms and documents that you send to the IRS.
Answer requests for additional documentation within the time allowed.
File and pay current taxes while applying for an Offer in Compromise on past due taxes.
Asset transfers will be reviewed by the IRS.
You will have to document how you are able to make the 20 percent payment or meet the demands of a repayment plan.
