Tuesday, March 6, 2012

Offer in Compromise

The IRS has a program to settle past due IRS debts which is called an Offer in Compromise.  The IRS has 10 years to collect on past due debts, and will get very serious about collection when it gets close to the ten year mark.  In this bad economy, many people with failing businesses use their money to keep a business running instead of paying their taxes.   When the business fails, the individual is left without income but still owes the taxes.

Beware of companies alleging "Pennies on the Dollar" settlements as if this is a foregone conclusion.  The IRS Offer in Compromise program is essentially very simple in concept.   The offer should equal the assets of the taxpayer plus 48 months of disposable income as derived by IRS guidelines for a lump sum payment.   By disposable income I mean your income less living expenses as defined by the IRS.   For example, if you now earn $50,000.00 a year as a family of four, based on the IRS guidelines you may only have $100.00 a month to pay towards the debt.   An acceptable offer would then be $4,800.00 plus the value of assets.  You have 5 months to pay this amount.

 I am also a bankruptcy attorney, so I can advise you of your options in that regard.  For example, it may be in your best interest to set up a payment plan for a period of time and then file bankruptcy.

I am a local attorney who not part of a large mill organization, and I may be able to help you with your IRS problems.

Visit my website at: tomtierneylaw.com

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