How to File an Offer In Compromise – A 5 Step Process

We filed an Offer in Compromise for a client in the beginning of February 2013.  His balance dues were less than $32,000 at the time. However, he had a few missing returns needing to be filed first. Once the returns were filed we could proceed with the financial form, collecting of supporting documentation, and subsequently the filing of an Offer in Compromise. After several months of waiting, and very close follow up once the Offer in Compromise was assigned, we were able to settle for $1,500 on $32,000.  Our client was very pleased with the results and is now in the process of paying the Offer in Compromise within the required 5 month timeframe.  How did we get to the point of settling you ask? Very detailed layout, structure, preparation and follow up.  The steps below outline the brief but detailed process behind filing an Offer In Compromise:

– First and foremost conduct a compliance check to insure all tax returns are on record, find out all balance dues you will be compromising and ensure the taxpayer is compliant with estimated tax deposits. Make sure you get a collection hold to obtain enough time to file the Offer in Compromise.

– Secondly, once the compliance check has been completed, fill out form the applicable financial form (business and/or personal) as well as the Offer in Compromise form. All attachments relative to the form must be furnished. Do not leave anything off the forms no matter how large or small financially.

– Third, don’t forget about the fee, the 20% down payment, or down payment and monthly payments thereafter depending on the Offer in Compromise. The taxpayer may not have to furnish a fee or down payment based on their financial condition.

– Forth step, contact the IRS and advise them you are filing the Offer In Compromise prior to the due date initiated in step one.  Once filed, get the appropriate follow up to make sure the IRS has the Offer In Compromise in their system and has designated your case as such.

– Final step, negotiate the offer. Almost  all Offers come back rejected, returned, declined, or are increased for one reason or another. The IRS doesn’t give much follow time once the process has been started. The offer can be negotiated with close and appropriate follow up.

There are several other things to think about such as the filing of an appeal, negotiating the offer, etc. Those steps will be covered in another article.

Best of luck. The Offer in Compromise process is tricky and it is a privilege to file an offer rather than a right.  One must remember to cross all T’s and dot all I’s. As the IRS will decline the Offer in Compromise if it comes over incorrectly, incomplete, or there are compliance issues to be dealt with. Call us at 720-398-6088 for more information concerning the Offer in Compromise process as we would be happy to help. You may also find out more information regarding the Offer In Compromise on our website at www.highlandtaxresolution.com.