What is an Offer in Compromise? Can anyone settle tax debts for pennies on the dollar?

An Offer in Compromise is when a taxpayer makes an offer to the IRS to settle their tax debt for less than they actually owe. While it is a legitimate IRS offering, there are limitations on who can qualify. To put it in its simplest terms, the IRS is not going to settle for less than they’re owed unless you legitimately cannot afford to pay the full amount. Additionally, they are going to want to collect as much as you can reasonably pay in a reasonable amount of time. Anyone who tells you differently is not to be trusted, no matter how nice they make it sound.

And there are other requirements that must be met. You must not be behind on filing your tax returns. And in most cases, an application fee of $205 is necessary.

When should I get a tax professional involved in an Offer in Compromise? In my opinion, I would say always. First of all, a professional is in the best position to soberly analyze your situation to determine the best options available to you, which may or may include an Offer in Compromise. Second, a qualified professional will know best how to craft that offer to give it the best chance of being accepted. After all, if your offer is rejected, your application fee is not refunded.

What if you already filed an Offer in Compromise on your own, and it was rejected? This would also be a time to get a professional involved to analyze your situation and plan the most prudent path forward.