IRS Tax Settlement – Offer in Compromise

An IRS Settlement is an agreement between you and the IRS to pay less than what you owe. The technical term used by the IRS is Offer in Compromise.

Are IRS Tax Settlements Real?

You may have heard many commercials advertising “Pennies on the dollar” or “I owed $100,000 and settled for $10,000.” Does this actually happen? The answer is yes, but it is not as easy as the commercials make it seem. We have gotten some great IRS Settlements for our clients. For example, we have settled a $60,000 tax case for $1,000. It does happen, but not everyone qualifies for an IRS Settlement.

IRS Settlements are objective and not subjective. You cannot simply call the IRS and say, “Yes, I owe $100,000. I have $10,000 in the bank. Can you take the $10,000 and wipe out the rest?” This will not work. An IRS Settlement is based on numbers. You will need to submit forms to the IRS supporting an IRS Settlement. If the numbers support an IRS Settlement, you will get an IRS Settlement. If the numbers do not support an IRS Settlement, you will not get an IRS Settlement.

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Learn More About Calculating an Offer in Compromise

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4 Steps to Calculating an Offer in Compromise

Learn step-by-step how to calculate an offer in compromise and whether a tax settlement is possible for your situation.

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Other Considerations when Calculating an Offer in Compromise

Understand some of the factors that can positively and negatively impact your tax settlement offer.

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5 Real Life Examples of Offer in Compromise Resolution

Relate to 5 different real-life examples of tax settlement submissions.

3 Types of IRS Tax Settlement

There are three different types of IRS Settlements:

Offer in Compromise Type 1 – Doubt as to Collectability
You are unable to pay the full amount of back taxes owed. You would like an IRS settlement based on what you can afford. Learn more about Doubt as to Collectability Offer in Compromise.

Offer in Compromise Type 2 – Doubt as to Liability
You believe the taxes the IRS say you owe are incorrect. This could be due to an error made by the IRS, your accountant, or you. If the error is corrected, you will owe fewer taxes. You would like an IRS Settlement equal to the corrected amount of taxes owed. Learn more about Doubt as to Liability Offer in Compromise.

Offer in Compromise Type 3 – Effective Tax Administration
You do not qualify for Doubt as to Liability or Doubt as to Collectability. However, due to exceptional circumstances, you would like an IRS settlement. Click here to learn more about Effective Tax Administration Offer in Compromise.

Each IRS Tax Settlement type is very different. Read more about each to see if you qualify.