If you owe money to the IRS, you can be in a very upsetting situation. Owing back taxes can create considerable challenges when it comes to events like buying a seek or seeking any type of loan, not to mention the financial penalties and the anxiety and fear that comes with government collection efforts.
For these and many other reasons, it can be critical that you not ignore this situation and figure out a way to deal with your back taxes. One option that you may be eligible to pursue is to make a compromise with the IRS. This is called an offer in compromise.
An offer in compromise is an option that allows people to settle tax debts for less than the full amount. However, it is only available to certain eligible people who are in specific situations.
In order to be eligible, you cannot be in open bankruptcy proceedings and you must be current with all filing requirements. So, if you did not file your taxes last year, you may not be able to pursue this option.
Further, you will need to show that paying back the full amount of taxes owed would create a very real financial hardship for you or that paying your full liability would simply be impossible.
Many people wonder why the IRS would ever consider accepting less than what is owed from taxpayers, but the fact is that accepting a compromise can be the best way the agency can collect some amount of money in a reasonable time. Otherwise, it is likely that it would collect less over a longer period of time.
In order to determine if you qualify for and will want to pursue an offer in compromise, you will want to discuss your situation and your options with an attorney. There are many ways you can address back taxes, but it is crucial that you act quickly and seek the guidance of a person experienced in tax laws and procedures.