Can taxes be settled by offering pennies on the dollar?
• The Offer In Compromise must include an amount equal to or greater than the total value of all assets, plus future income. • That total is generally the reasonable collection potential amount, and not simply an offer of ten cents on the dollar, or a percentage of the debt. • The Offer In Comprise program is not designated to be a program for everyone with financial problems, and it should not be viewed as an invitation to avoid paying taxes.
OICs must include an amount equal to or greater than the total value of all assets, plus future income. That total is generally the reasonable collection potential amount, and not simply an offer of ten cents on the dollar, or a percentage of the debt. A consumer alert has been issued advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar.” The IRS cautions that the OIC program is not designated to be a program for everyone with financial problems, and it should not be viewed as an invitation to avoid paying taxes.
An offer in compromise based on doubt as to collectability, to be accepted, must provide for the payment of an amount equal to or greater than the total liquidation value of all assets, plus the amount that could be paid from future income after subtracting reasonable and necessary living expenses. That total is called the “reasonable collection potential” amount. Offers are not considered or evaluated on the basis of any magic percentage of the debt. The IRS cautions that the offer in compromise program is not designed to provide an answer for everyone with financial problems, and it is certainly not a device for paying less than the taxpayer can reasonably and properly afford to pay. Shysters that promise to “solve your tax problems for pennies on the dollar” should be avoided like the plague.
OFFER IN COMPROMISE must include an amount equal to or greater than the total value of all assets, plus future income. That total is generally the reasonable collection potential amount, and not simply an offer of ten cents on the dollar, or a percentage of the debt. The IRS cautions that the OFFER IN COMPROMISE program is not designated to be a program for everyone with financial problems, and it should not be viewed as an invitation to avoid paying taxes.
