There is nothing worse than getting a notice from the IRS stating that you owe thousands of dollars in back taxes and they intend to collect the debt. Of all the people you could possibly owe money to, the IRS is the only one that is practically a law unto themselves and one way or another they will collect the money you owe them. The question is do you want pay them the full amount or would rather pay only a portion of the amount and be debt free? Most people will automatically say that there is no way out of the situation, but if you can negotiate an offer in compromise, you can settle the debt for far less.

An offer in compromise is an agreement between the taxpayer and the IRS that will settle your tax debt for far less than you actually owe with the rest being written off. Once you have completed the terms of the agreement you will be free of any debt to the IRS for past taxes. You will find that there are three different types of OIC available and you must fall into one of these categories if you wish to be considered for the program. The first type of offer in compromise is when there is a verifiable doubt that the tax debt will ever be collectable. In this case both the taxpayer and the IRS agree upon the actual amount due, but realize that given the income of the debtor there is no chance that the debt could ever be repaid.

In order to qualify for this program you cannot own any real property and be making only enough to subsist on. The second type of offer in compromise is when there is doubt as to whether the tax payer is actually liable for the amount claimed. Evidence must be presented that can show that the tax examiner misinterpreted the laws, the examiner refused to look at any evidence that was presented that would prove otherwise or you have new evidence that will prove you do not owe the specified amount. The final type of offer in compromise involves being able to prove that paying the full amount of money that you owe will cause undue hardship to you and your family. The only time this is likely to be considered is if someone in your immediate family has a long term illness or disability and the money you have must be used for their care.

In a case such as this the payment of back taxes would take away from the money you would need for medical care. If you have been assessed and presented with an enormous tax bill you may want to see if you can qualify for an offer in compromise. While the number of approvals is low you are going to need professional help such as that offered by the Certified Tax Group to help you get through the paperwork and have the best possible chance that the IRS will work with you to settle your debt.