In Business Taxpayers: Things to Watch Out for When Filing an Offer in Compromise

If you own a business, operate a business, or have ownership percentage in a business, beware of the repercussions it could cause with regard to a personal Offer In Compromise.

A personal Offer In Compromise under doubt as to collectibility, or effective tax administration is an offer to settle the outstanding amount owed for any personal income tax, Civil Penalty, or any other personally assessed balance due. When filing a personal offer in compromise the IRS takes into account all personal assets, equity in assets, bank accounts, and of course an income and expense ratio as well. As of late, the IRS has been asking individuals who have ownership in a business (as little as 5%) to disclose the financial situation of the business. This can cause a sticky situation to arise between business owners, shareholders, and non-liable partners of the business.

The best advice we can give is to have the individual filing for the Offer to disclose a valuation of the business up front. Try to take into consideration the value of the business, percentage, or shares if the individual were to “cash in” and receive either a profit or the initial investment back. It is best if this information is offered up front as to not cause scrutiny upon investigation of the Offer In Compromise. If you need a valuation specialist, appraiser, or other valuation professional do not hesitate to contact us directly at 720-398-6088.

We would suggest seeking out a professional at Highland Tax Group, Inc. prior to filing an Offer In Compromise on your own.