Robert J. Fedor, Esq., L.L.C.

Pursuing an offer in compromise could settle delinquent taxes

As the April 15 deadline to file federal income tax returns has come and gone, many people might be awaiting correspondence from the Internal Revenue Service. Some might be expecting a refund check. On the other hand, those who are in tight financial circumstance might dread getting a notice of delinquency from tax officials.

Feeling overwhelmed by tax bills and the potential for penalties as a result of failing to file on time is understandable. The IRS is generally aggressive about pursuing tax debts. For those in this situation, it may be best to explore available options and then work toward resolution.

One option might be to pursue an offer in compromise. According to the IRS, this is a way for individuals to settle a tax debt for less than the full amount owed. People who are financially unable to pay the IRS in full may qualify.

When reviewing requests for offers in compromise, tax officials look at a variety of criteria to determine eligibility. Namely, they will scrutinize a person's ability to pay, current income, regular expenses and asset equity. The IRS indicates that all of this is taken into consideration when determining what a person could reasonably pay back.

After receiving approval for an offer in compromise, a person will have to decide if they want to make a lump-sum payment or complete the agreement with a payment schedule.

Dealing with the IRS can be difficult and intimidating. As such, it may be beneficial to consult with an experienced attorney. By approaching tax delinquency in this strategic way, financially strapped people can proceed to resolve a critical debt with increased confidence.

Source: The Internal Revenue Service, "Offer in Compromise," accessed April 25, 2014

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