Offer in Compromise | IRS Tax Debt Relief

Courtesy: David Jacqout, Tax Attorney

The ultimate goal of an Offer in Compromise is a settlement, reduction and/or elimination of the tax liability that is in both the Government's and the taxpayer's best interest.

The IRS will accept an offer-in-compromise to settle unpaid accounts for less than the amount owed when there is doubt that the liability can be collected in full and the amount you offer reasonably reflects collection potential. IRC §7122 authorizes the IRS to reduce any tax liability.

To submit an offer-in-compromise you must complete Form 656; complete instructions are provided on the form. Also, you must submit Form 433-A, Collection Information Statement for Individuals, or Form 433-B, Collection Information Statement for Businesses, if the basis of the offer is doubt that the liability can be collected in full. These forms provide a statement of your income, expenses, assets, and liabilities.

The IRS will not accept an offer unless it is clear that you have complied with all current filing requirements.

What are acceptable sources of funds for Offer-in-Compromise Form 656 section 7?
-- Money from any type of source including but not limited to: 401(k) loans, loans from family and friends, sale of assets, refinance with a lien subordination request if feasible, accounts receivable factoring, credit card loans, etc...