IRS Offers in Compromise
IRS Issues Consumer Warning:
IR-2004-130, October 25, 2004
WASHINGTON — The Internal Revenue Service today issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program.
Such promoters make money by inappropriately advising indebted taxpayers to file an application for an offer in compromise with the IRS, promising unrealistic results, even when the taxpayers do not meet the requirements of the program. This bad advice costs taxpayers money and time.
Taxpayers may refer promoters who are using the program inappropriately to the IRS’s Office of Professional Responsibility for civil sanctions by sending their complaint to: Office of Professional Responsibility (SE:OPR), Internal Revenue Service, 1111 Constitution Avenue N.W., Washington, DC 20224.
An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances.
“This program serves an important purpose. But we do warn taxpayers to watch out for unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “Taxpayers should not be duped by high-priced promises.”
Straight Scoop on IRS Compromise Offers
Every offer in compromise related to the
collectibility of a tax liability must be accompanied by a complete financial disclosure of the
taxpayer, accomplished by filing an IRS form 433 with the offer. From this financial disclosure, a
mathematical calculation is performed, determining a value relating to the taxpayer’s reasonable
collection potential (RCP), which is listed on the application for the offer in compromise, form 656.
The taxpayer that is duped into filing an Offer in Compromise through a "Settlement Company" promising to produce unlikely results based on their "reputation" with the IRS, will lose valuable time and most likely will have their property levied while waiting for results that will never come. These strict rules are in place to ensure that taxpayers are all treated equally under the law. Don't be fooled into believing you will be treated differently.
What You Need
You really need to obtain accurate and reliable information regarding your rights as a taxpayer, and this valuable information may not be what you want to hear. This is the key to helping you understand what viable options you have and what decisions are right for you. Therefore, if you get bad information, you will most likely make a bad decision that will cost you down the road. I would strongly suggest searching the name of the company you plan on doing business with along with the word complaints or fraud.