The Internal Revenue Service<
has had the ability to compromise liabilities owed to the United States
Government for many many years. This taxpayer benefit has been
applied inconsistently to taxpayers around the country (click
here to see how inconsistent the IRS is toward Offers). It has
been a process known to only a few and
usually benefited only the well-connected and wealthy taxpayers of the
country. For example, even in the nineties, taxpayers in Florida
were denied this benefit until knowledgeable taxpayer representatives
forced the issue through the use of elected representatives. Even
today, if you live in Arizona, you will be denied a speedy resolution of
your Offer in Compromise. The managers of the various IRS Districts
have been accustomed to setting their own priorities and many of them do
not relish cutting deals with taxpayers regardless of the benefit to the
Government and the taxpayer.
For many years there were two types of
offers:
-
Offer in Compromise on Basis of
Liability
-
Offer in Compromise on Basis of
Collectibilty
In 2000 another category was added:
-
Offer in Compromise on Basis of
Effective Tax Administration
A layman might think "Well, it seems
everyone is getting a deal on their taxes. I think I'll offer, say,
twenty cents on the dollar."
Sorry, it just doesn't work that way.
The great majority of taxpayers will have to pay their taxes in full.
Submission, negotiating, and winning
acceptance of an Offer in Compromise is more art than science. Many
variables outside the control of the taxpayer impact the decision.
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