It’s always a good week at Resolute Tax Services when we get an Offer in Compromise accepted for one of our clients. This week we had the second Offer accepted for the year of 2015. Our customer has been with us for a couple years now. We started by helping with other services. About 6 months ago we decided to assess their situation to see if we had a chance at a settlement with the IRS. Everything looked promising, and we decided to prepare and send out our Offer.
When having an Offer in Compromise the IRS assesses our customers financial situation. The IRS assesses their assets and their income against what their required monthly expenses are. The monthly income and expenses need to be verified through documents such as bank statements, pay stubs, utilities, or mortgage statements. Some expenses don’t have to be verified, such as automobile expenses and food/clothing expenses. These expenses, in considering a settlement or a payment arrangement, are considered against the allowable expenses that the IRS has established (http://www.irs.gov/
The IRS allows a set amount for the automobile expenses of $291 per car(only one allowed per person). There is an exception to this, and helped in the case of this customer. When your car is older than 6 years and has miles exceeding 75,000 then the IRS will allow an extra $200 of unverified expenses per car. This can result in lowering the acceptable offer amount by up to $4,800. This allowed us to have our Offer accepted for just $100. Now our customer just needs to file their taxes on time every year and not have a balance/pay off the balance when it is filed.
You may be able to do an IRS settlement on your back tax debt. Make sure that you explore and pursue the option with the help of an experienced tax professional.