Income tax and the offer in compromise

| Jun 21, 2018 | Income Tax

Connecticut residents who owe a substantial amount in taxes for either the current tax year or as a result of owning back taxes may feel overwhelmed at the thought of trying pay the IRS. If one lacks the funds to pay everything off all at once, it is easy to feel somewhat trapped and defeated. Thankfully, there are options out there to help individuals in just this kind of income tax situation. One great example is an offer in compromise.

An offer in compromise, if it is something for which one qualifies, allows a person to settle his or her tax debt for a lesser amount than what is actually owed. This is not something that is available to everyone. It is only an option for those who can show that paying their full tax debt would create a financial hardship or for those who truly lack the means to meet their tax liability.

Those who wish to know if they are eligible for an offer in compromise can turn to the Internal Revenue Service’s website for qualification information. It is also possible to discuss one’s eligibility with an experienced tax law attorney. If it is determined that one meets the necessary qualifications, one must then:

  • Fill out the necessary forms
  • Pay the application fee
  • Include the initial tax payment with the application

There are two payments options available with an offer in compromise: lump sum and periodic. If one opts for the lump sum option, it means that he or she will have to pay 20 percent of the offer amount with the application. If the offer in compromise is accepted, the remaining sum will have to be paid. If a person chooses the periodic payment option, it means that he or she will submit an initial payment with the application and, if approved, then have to make monthly payments until the balance is paid off.

The IRS is willing to work with people who struggle to meant their income tax obligations. It is just a matter of asking for help and looking at all of the options out there. Connecticut residents can turn to an experienced tax law attorney who will be able to offer guidance on how to handle tax debt and assistance in pursuing tax relief.

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