Negotiating a Settlement with the IRS

January 8, 2015

People in Minnesota who owe back taxes may be able to settle their debt with the Internal Revenue Service for less than what they owe. Individuals who meet certain requirements may qualify for the Offer in Compromise program. However, an Offer in Compromise might not be approved unless the IRS has already given the individual the opportunity to use other payment options.

Before using the Offer in Compromise program, taxpayers may ask if they can be allowed to try to pay off their back taxes in monthly installments. If monthly payments are impossible for some reason, the taxpayer can file Form 656, Offer in Compromise along with Form 433-A and Form 433-B, Collection Information Statements. An application fee of $150 or Form 656-A, Income Certification for Offer in Compromise Application Fee must also be submitted.

In order to use the Offer in Compromise program, at least one of three different conditions must exist. There must be reasonable doubt that the amount owed is correct, doubt that the individual would ever be capable of paying the amount that is owed or another exceptional circumstance. In cases involving an exceptional circumstance, taxpayers must show that payment would create an economic hardship.

A person who owes more tax than they can afford to pay might want to speak with an attorney. With legal representation, the taxpayer might have more success achieving a favorable outcome with the IRS. Through negotiation, an attorney may help clients to settle for a much lower amount than they would have been able to receive if they were dealing with the IRS on their own.

Source:¬†Gaebler Ventures, “IRS Tax Settlements“, January 06, 2015