J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

From time to time I have prospective clients come into my Houston law office, and their primary debt problem is I.R.S. income taxes, or sometimes it is payroll taxes, that they have withheld from their employee's pay.

If taxes are the issue, one option for people can be an Offer in Compromise. In an offer, you are offering to "settle up" with the I.R.S., by proposing to pay them a lesser amount, in return for a full settlement of your taxes. As Nina Olson, IRS Taxpayer Advocate explains in this video, there are pros and cons to an Offer in Compromise.

You must be "in compliance" with the tax laws when you file one, that means you must have filed all of your tax returns, and you must be current on your "Estimated Tax" or ES deposits, if you are self-employed. Also, you must file and pay on time for 5 years following the acceptance of an offer in compromise, or the IRS will declare that you have defaulted, keep the money that you paid so far, and come after you for the rest.

For some people, these basic requirements of a successful Offer are just too much. It is possible to do an Offer in Compromise by yourself, but if you have significant income or assets, it's probably best to hire a professional. As Ms. Olson states in her video, only licensed attorneys, Certified Public Accountants, and "enrolled agents" are authorized to represent taxpayers in these matters.

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