Offer in Compromise in Long Island

What to Know Before Filing an Offer In Compromise

A mutual agreement between a taxpayer and the Internal Revenue Service (IRS) that is meant to settle the taxpayer's liabilities for less than the original amount is considered an offer in compromise. However, if the IRS believes that the liability can be paid either by lump sum or through an installment agreement, an offer will be refused unless there are very unusual circumstances.

The IRS will total the value of a taxpayer's assets (bank accounts, cars, real and other property, for instance) to roughly calculate the taxpayer's ability to make payments, thus determining the reasonable collection potential (RCP). If the RPC is less than the amount offered by the taxpayer through the offer in compromise, it is improbable that the IRS will accept the agreement. If you need advice or help preparing your offer in compromise, reaching out to a Long Island tax attorney is a great first step.

There are three plausible scenarios that will likely support an offer in compromise. The first type is called a Doubt as to Collectability, which is the reasonable doubt that a taxpayer could ever pay the full amount of the liability within the allotted statutory period of collection. The second type is referred to as Doubt as to Liability, which insinuates the possibility of error in the assessed tax liability. This circumstance may happen due to the examiner's mistake when interpreting the law, the examiner's failure to consider the taxpayer's evidence, or the arrival of new evidence from the taxpayer. The third type is called Exceptional Circumstances, or Effective Tax Administration. This situation states that, although there is no doubt that the tax is correct and that there is potential of full collection from the taxpayer, there is an exceptional circumstance that proves reason for the IRS to accept. In this situation, a taxpayer is required to indicate that the tax collection would be either unfair, inequitable, or provide a serious financial hardship.

Tax Lawyer in Long Island, NY

If you would like to take the next step in handing your debt once and for all, Blutter & Blutter is here to help. The firm prides itself on the ability to create assertive and compelling cases regarding offer in compromises, while paying special attention to the needs of clients.

An offer in compromise can be difficult to organize. Contact a Long Island tax defense attorney to get aid and information.