It’s nearly that time of the year when you have to file your taxes. You’ve likely been expecting it, but you’re not necessarily prepared for it. You aren’t alone. Tax season is often the most feared time of the year because taxpayers don’t want to know what they owe the Internal Revenue Service (IRS).
Many people end up paying hundreds, sometimes thousands of tax dollars to the IRS. This can be difficult to do for some people. Taxpayers struggling to pay off their tax debt may be able to settle a deal where they pay less taxes than they owe. This is called an offer in compromise. Here’s what you should know:
Settling your tax debt
An offer in compromise isn’t available to everyone. The IRS looks at each taxpayer who applies for an offer in compromise and their specific conditions, such as their income, assets, other debts, rent, grocery bills, other expenses and — ultimately — their ability to pay their taxes. The offer in compromise application process will even require taxpayers to disclose whether they are currently going through bankruptcy and if all tax documentation has been filled.
The whole process is fairly in-depth and many applicants are not accepted. The application for an offer in compromise may even be denied for some of the following reasons:
- Necessary information is not provided
- Tax returned have been missed
- Estimated tax payments for the current year have not been made
- Tax payments aren’t being made
- The application fee was not paid
Tax season is hard on many people. If you’re applying for an offer in compromise, or have applied and been denied, then you may benefit from legal guidance.