We have all heard the television and radio advertisements in which someone declares that they owed tens of thousands of dollars to the IRS but that a certain attorney or agency worked with the IRS and reduced that debt to “pennies on the dollar.” You may have asked yourself, “How is that possible?” or “What special key does that agency hold to access the IRS’s generosity?” The truth is, these people are simply taking advantage of the IRS Fresh Start Program.
The IRS started the Fresh Start Program 10 years ago in 2011 to help people who were struggling to pay their bills resolve their tax issues in a more timely and manageable way. The program has been so successful that the IRS continues the initiative today, making minor adjustments along the way. While the Fresh Start Program has many facets, a key element was making common-sense changes to the Offer in Compromise (OIC) process. It is through this OIC process that people can reduce their tax debt to “pennies on the dollar.”
At its most basic form, an OIC is intended for a taxpayer to show the IRS their true current economic circumstances and work out a more reasonable collection amount for the taxpayer to pay. The IRS will want to look at all the assets a taxpayer owns, then they will compare that amount with all the debts a taxpayer has to determine their individual equity. In addition to their individual equity, the IRS will look at the taxpayer’s monthly income in comparison with their monthly expenses to determine a future monthly income. The IRS will combine the taxpayer’s individual equity with their future monthly income to determine a more appropriate collection amount. If this amount is lower than the current tax debt, a taxpayer can offer to pay this amount in a shorter period. If someone has low or no individual equity and a very low future monthly income, they could end up paying “pennies on the dollar” for their tax debt.
To find out if an OIC will work for you, contact a Pearson Butler attorney or Certified Public Accountant (CPA) online to talk through your personal circumstances. Or visit the IRS “Offer In Compromise Pre-Qualifier” webpage here. There are, however, many other options available to a taxpayer if the OIC option is not available to them. Our team can discuss all those options with you as well.
Don’t wait. Call Pearson Butler at (800) 265-2314 today.