Do you qualify for an offer in compromise?

If you are having difficulty managing your debts, then tax season can be either a blessing or a curse, depending on whether you are an employee or if you have self-employed income. If you have your own business or work as a sub-contractor in Michigan, your income does not have taxes taken off of it when you get paid, and you are required to pay what you owe when you file taxes.

When the amount owed is too high for you, an offer in compromise may be a suitable option. If you want to pursue this option with the IRS, you first need to be able to prove your eligibility to the IRS.

Requirements

According to the IRS, in order to have your application for an offer in compromise considered, you first need to finish your complete tax return up to the point where you are asked to submit your payment to the IRS. Even then, you must also be able to pay the application fee for an offer in compromise application.

Qualifications

 The first thing you should be aware of in regard to what would disqualify you is that the IRS will not grant an offer in compromise to anyone who is currently in the midst of a bankruptcy proceeding. Beyond this piece, the IRS considers a few things.

They will look at the total equity of all of your assets as well as your ability to pay. They will also calculate the ratio of your income to your expenses. If you offer an amount that they believe is the most they can expect to collect within what they consider a reasonable period of time, the IRS will typically approve the offer.

This article is purely informational and not a form a legal advice.