Innocent Mistakes That Could Disqualify You From Getting An IRS Offer in Compromise

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An IRS Offer in Compromise may seem like your best bet for escaping the burden of tax debt that currently dominates your life — but it’s by no means guaranteed. One wrong move on the long road ahead, and you could inadvertently disqualify yourself from this valuable program. As you proceed, make every effort to avoid these mistakes:

Failing to Disclose Your Financial Situation

The IRS enjoys access to a variety of documents that can be used to verify your financial status. As such, it is never wise to leave out key information that you suspect could prevent you from qualifying. Full transparency is critical; you’ll need to share extensive details about your income and assets. Take every possible source of income into account; if you inadvertently fail to disclose information that the IRS later discovers, you might arouse unwanted suspicion.

Non-Compliance With Tax Returns

If you complete an application for an Offer in Compromise but fail to file your tax return on time, you’ll face a swift rejection. Don’t avoid filing simply because you’re worried about paying this year’s taxes; in select circumstances, new tax debt can be included in an OIC that otherwise primarily addresses past debts.

Frivolous Spending

Something about financial duress makes throwing in the towel and splurging that much more tempting. Nothing provides relief quite like a vacation or a shopping spree, right? Unfortunately, that ‘small’ splurge could cause big IRS problems if you intend to score an Offer in Compromise. During the income verification process, the IRS will scrutinize your bank statements. Signs of frivolous spending indicate a source of untapped disposable income — thereby disqualifying you from the OIC you so desperately need.

Job Change, Increase in Income, or Marital Change

If you change jobs, have an increase in income, take on new work, or get married, these are all changes that could affect the outcome of Offer in Compromise. Marital changes happen to be one of the biggest changes our clients make during the OIC process and it can affect the OIC amount more than you know. Try to keep your financial house the same as when you filed your OIC.

Don’t let a simple mistake prevent you from scoring an IRS Offer in Compromise. Highland Tax Resolution can help you obtain much-needed tax relief — call 720-398-6088 to learn how.