CHECK CAREFULLY BEFORE APPLYING FOR OFFERS IN COMPROMISE

Courtesy of IRS

WASHINGTON - The Internal Revenue Service today issued a consumer alert advising taxpayers to beware of promoters' claims that tax debts can be settled for "pennies on the dollar" through the Offer in Compromise Program.

Such promoters make money by inappropriately advising indebted taxpayers to file an application for an offer in compromise with the IRS, promising unrealistic results, even when the taxpayers do not meet the requirements of the program. This bad advice costs taxpayers money and time.

Taxpayers may refer promoters who are using the program inappropriately to the IRS's Office of Professional Responsibility for civil sanctions by sending their complaint to:

Office of Professional Responsibility (SE:OPR),
Internal Revenue Service, 1111 Constitution Avenue N.W.,
Washington, DC 20224

An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances.

The application package, IRS Form 656, Offer in Compromise, was recently redesigned with new instructions, worksheet and checklist to make it easier for taxpayers to determine if they are eligible for the program and to accurately prepare the necessary forms. The July 2004 revision of the application form also contains a new paid preparer signature block. Taxpayers may wish to reconsider using preparers who hesitate to identify themselves on the form.

An offer in compromise may be considered only after other payment options have been exhausted. If taxpayers are unable to pay their taxes in full, there are other payment options, such as monthly installment agreements, that must be explored before an offer in compromise can be submitted.

The IRS Web site at www.irs.gov contains information on the collection process and payment options. Additional information is available in IRS Publication 594,  The IRS Collection Process, and Form 9465, Installment Agreement Request. These documents provide complete information on all options available and help taxpayers determine if they qualify for a payment program.

Taxpayers who are unable to pay their taxes in full and who have explored the various options should use the checklist in the Form 656 package to determine if they are eligible for an offer in compromise.

For more information, call the IRS Tele-Tax system toll-free at 1-800-829-4477 and select Topic 458. Or go to the IRS Web site at www.irs.gov and use its search engine to find Tax Topic 458.

Courtesy of Courtesy of the Internal Revenue Service.
Published TaxMama.com 10.29.04