Pennies on the Dollar!
Nearly every taxpayer that contacts me for help asks me some version of this question: Can you help me settle my debt for less with the IRS? The best answer is, maybe. While it is certainly possible to settle for “pennies on the dollar” like the advertisements say, not everyone is eligible for the Offer in Compromise (OIC) program. There are also a number of circumstances where a taxpayer is eligible but the program isn’t the best way to resolve their debt.
The OIC program was established to provide taxpayers an option to resolving their debt when they are not in a position to repay their debt to the IRS or when there is an actual dispute as to whether the debt is actually correct. The entire submission and review process can take one to two years from start to finish and requires an incredibly financially invasive application. Because of that, the OIC program should, in most cases, only be considered as a last resort for addressing your tax debt.
Generally, good candidates to look at for the OIC program are those on a fixed income like Social Security or Disability, those with low income that are unlikely to have a pay increase in the future, and those with no assets like a retirement account or home.
The amount of an offer will depend on the information provided in the application. I was able to assist one client with an offer of $100 to settle her $36,000 debt. She was a disabled woman on a fixed income. Another client had an offer of $12,000 to settle a $100,000 debt. He had a modest income and didn’t have any assets to cause the IRS to request a higher offer amount. None of these results are guaranteed but these are great examples of the program.
If you have a tax debt that feels too big to tackle, an Offer in Compromise might be an option to consider. The best way to know if you qualify for this type of resolution or others is to have a case evaluation done for you. Dryden Tax Resolution can analyze your situation to determine the options to resolve your unique tax situation for a low initial cost. You can schedule an appointment for a free 30-minute consultation here.