Getting an Offer in Compromise on 941 Tax Debt

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Struggling to pay the business tax debt? Don’t ignore the issue; help may be available. An Offer in Compromise may allow you to settle your debt for less than you actually owe. It’s a great option for avoiding harsh action from the IRS and minimizing the burden of tax debt on your company.

What Is an Offer in Compromise? Who Is Eligible?

An Offer in Compromise consists of a tax payment agreement between an indebted business and the IRS. The mutually beneficial program allows employers to secure reduced tax settlements while minimizing the hassle of collecting unpaid taxes.

To qualify, the IRS must establish doubt as to liability and collectibility. Doubt as to liability involves disputes regarding the existence of tax debt. Doubt as to collectibility suggests that the business will never be capable of fully settling this debt.

Eligibility can be difficult to determine. To help, the IRS offers a pre-qualifying quiz. This pre-qualifier is not available to corporations, partnerships, or those residing in foreign countries. If you’re unable to take the pre-qualifier, complete the application included in the IRS Offer in Compromise Booklet.

Offer in Compromise for Business Tax Debt: Necessary Forms

The Offer in Compromise process varies considerably between individuals and businesses. If you owe business tax debt, complete Forms 433-B and 656(s).

Payment Options

Initial payment levels may differ based on the specific offer. Payment approaches include:

  • Lump sum. This approach mandates an initial payment of twenty percent of the total offer amount. If the offer is accepted, you’ll need to cover the remaining balance within five payments.
  • Periodic payments. Depending on your circumstances, you may be eligible for monthly installments. These begin with the initial application and continue through the IRS consideration period — and until your debt is paid off in full.

What If My Offer Is Rejected?

If your offer is rejected, you can file an appeal within thirty days. This is completed via Form 13711 — Request for Appeal of Offer in Compromise. The IRS also offers an online self-help tool for rejected Offers in Compromise.

Struggling with an IRS Form 941 issue? The professionals at Highland Tax Group can help you explore solutions, like an Offer in Compromise. Call us now at 720-398-6088, or visit our website.