An offer in compromise is an agreement with the IRS to pay less than your full tax. If you’re not able to pay your tax debt—or if paying would create a financial difficulty in your life—the IRS may accept a lower tax amount. They’ll need to analyze your income, expenses, assets, and ability to pay. Learn more about what an offer in compromise is, including how to get expert offer in compromise help, below.
How Long Does an Offer in Compromise Take?
If the IRS agrees to your offer in compromise, you might complete the process in about six to eight months. If you receive a rejection, your appeal could stretch the process to a year or even two.
Here are the steps involved in a typical offer in compromise process:
- 3–6 Weeks: Work to take your offer to the “processable” stage—when you have you met the basic qualification requirements
- 4–6 Weeks: Your case is reviewed by a Compromise Examiner
- 4 Weeks—8 Months: Your Compromise Examiner decides what you could reasonably be able to pay
- Acceptance or Rejection: After a total of six to eight months, you receive the Compromise Examiner’s decision
How Much Should You Offer For an Offer in Compromise?
First, to get the IRS to consider an offer in compromise, you need to offer more than the lowest amount that the IRS thinks they can collect from you each month. How much is that? The IRS will base it on:
Your monthly income minus your fixed expenses (like food and rent, not leisure activities)
The amount you’re left with is considered your “disposable income,” and you should offer at least that number times 12 (for a full year) to the IRS for your offer in compromise.
Does an Offer in Compromise Hurt Your Credit?
No, an offer in compromise won’t hurt your credit. If you don’t pay your taxes, the government will create a tax lien showing that you owe them a payment. That fact will show up on your credit report. But when your offer in compromise is accepted, that tax lien can be taken off your report. However, to be sure, you may need to contact the credit reporting bureaus to have it removed.
Now that you know the meaning of “offer in compromise,” if you need guidance with this difficult tax situation, contact Tax Help MD. We even have an offer in compromise service that could be perfect for you. Our tax help relief services can help with all kinds of tax issues.