Offer in Compromise Lawyers in St. Louis Helping You Settle Liabilities
Owing an outstanding bill to the Internal Revenue Service (IRS) can be a stressful and frustrating time. Fortunately, the IRS has developed a few services that taxpayers can use to pay back taxes and outstanding debts without undue financial hardship. One of these services is called an offer in compromise, and it lets individuals settle their outstanding debts for less than what they owe.
If you’d like to apply for an offer in compromise, The Law Firm of Lance R. Drury, P.C. can help. Negotiating with the IRS can be difficult and time-consuming, especially on your own. Hiring a professional tax lawyer is the best way to protect your rights and advocate for yourself. To learn more about our services and to receive a free consultation, call us at one of our offices:
Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.
What Is an Offer in Compromise?
At its core, an offer in compromise is an agreement between a taxpayer and the IRS. The agreement typically states that the taxpayer’s liabilities will be settled for less than the amount owed. To take advantage of this agreement, the IRS will investigate the taxpayer’s income, asset quality, expenses, and ability to pay.
Taxpayers can submit an offer in compromise to the IRS at any time. The IRS charges a small application fee, and the taxpayer must submit an initial payment along with their application. This payment will fluctuate depending on the offer detailed in the application.
An offer in compromise is a complex agreement with many rules and regulations to follow. If you are not experienced in tax law, applying for and accepting an offer in compromise can be confusing. Contact us today for representation and an experienced explanation of an offer in compromise.
Who is Qualified for an Offer in Compromise?
You are eligible to apply for an offer in compromise if:
- You have filed all your tax returns and made all required estimated payments.
- You are not in an open bankruptcy proceeding.
- You have a valid extension for a current year’s tax return.
- You are an employer and made tax deposits for the current and past two quarters before applying.
Once you inquire about an offer in compromise, the IRS will then do its own investigation to see if you qualify. In most cases, if your assets and income are less than the amount you owe, or if you can prove that paying the debt would be an extreme economic hardship for you and your family, you will qualify for an offer in compromise. The IRS may also consider other exceptional circumstances depending on your situation.
The IRS has a pre-qualifier tool on its website that you can use to see if you qualify. However, this tool is not always accurate. The IRS uses its own formulas regarding taxpayers’ income and expenses to determine whether or not they can pay their debts. Fortunately, if you are not eligible, the IRS will return your application and application fee and apply any offer payment you made to the balance you owe.
If you are uncertain whether you qualify for an offer in compromise, contact our team today. We will review your circumstances and determine whether applying for an offer in compromise is the right legal path for you.
What Happens While the IRS Evaluates Your Offer in Compromise?
After you submit your offer in compromise, the IRS will then evaluate the offer and your circumstances.
As the IRS evaluates the offer, the following will happen:
- The IRS may file a Notice of Federal Tax Lien
- The IRS will suspend other collection activities
- You will make all required payments per your offer
- You will suspend any payments on existing installment agreements
- Your offer will automatically be accepted if the IRS does not make a determination within two years
What Are the Payment Options in an Offer in Compromise?
After you submit an offer in compromise and your offer is accepted, you can choose a payment plan to pay the amount offered. The payment plan that you choose will impact your initial payment.
There are two ways to pay your liabilities:
Lump Sum Cash
If you pay lump sum cash, you must submit an initial payment of 20% of the total offer with your application. Any remaining balance you owe must be paid in five payments or fewer. If your Offer of Compromise is rejected, the 20% initial payment will be put toward your debt owed.
If you choose periodic payments, you will submit your initial payment with your application. As the IRS considers your offer in compromise, you will continue to pay your balance in monthly installments. If your offer is accepted, you will keep paying the IRS monthly until your debt is fully paid off.
However, if you meet the low-income certification guidelines defined by the IRS, you do not have to pay an initial payment or make monthly payments while the IRS considers your offer.
Should I Hire an Offer in Compromise Attorney?
Applying for an offer in compromise is an excellent option if you have an outstanding debt with the IRS. However, applying for an offer in compromise on your own can be time-consuming and confusing. The best way to get your offer accepted and pay less than what you owe is to hire an offer-in-compromise attorney to assist you with your application and help you follow all the guidelines if the offer is accepted.
At The Law Firm of Lance R. Drury, P.C., we have experience helping our clients submit Offers in Compromise and advocating for their rights. Please don’t feel like you have to negotiate with the IRS alone. For a free consultation and to learn more about how we can help you, call one of our offices today: Ste. Genevieve, (573)-883-3056; St. Louis, (314)-260-6120; Nashville, (615)-733-8168; and San Antonio, (726)-202-1300.