Any Authenticity To The Stories About Neglectful Taxpayers Who Settle Back Tax Debt For A Small Fraction Of The Original Amount?

Yes, there absolutely is. This is not just the material of urban lore. It happens over and over through the use of a application that the feared Internal Revenue Service, themselves, has come up with to assist careless tax payers settle back taxes. The program is known as an "Offer in Compromise", or more short form an "OIC". The IRS has been known to allow as little as one (yes that's right, the number "1") per cent of an sum owing on a tax allegation and call it settled.

These OIC's are totally up to the government's discretion, as there is no legalized entitlement to have a valid tax balance lowered by the IRS. That being said, the IRS must give a accurately presented Offer appropriate consideration.

Consider the case of Henry who was living on a set income and realized himself in arrears to the IRS for the sum of $13000. That's because a back tax bill can grow at a fast pace with all the additional fees, penalties and interest that they append to it. These things take on a life of their own after a while. Henry did the smart thing and enlisted the help of a commissioned agent to represent his case to the IRS. The commissioned agent negotiated a huge reduction from the full amount of $13000, getting it whittled down to a manageable $2000! This was an amount that Henry could bear to repay and get back to his life without the IRS stalking him.

If this OIC thing is starting to sound like it could be the way for you, keep in mind that merely wanting to do a deal with the IRS is not sufficient of a condition. After all, wouldn't every person like to have his or her tax bill abated? You first have to meet the specifications for an Offer in Compromise by showing the IRS that one of these type of conditions exist:

What the IRS calls "Doubt as to Collectiblity". Simply put there is some misgiving as to whether they can receive payment of the debt from you.

"Doubt as to Liability". There is some prudent reservation as to whether you owe the tax bill at all. This one is highly a long shot at best.

Lastly, due to some extenuating circumstances, the payment of the full tax bill would cause you an economic misfortune or would be unfair or unjustified.

The bottom line here is if you think you might qualify for one of these sensational reductions in your overdue tax debt, you should try to find professional help in making the judgement, and if a good basis exists, employ them to represent you before the IRS. This is not an endeavor you want to do on your own. The aphorism from the law profession " he who acts as his own attorney has a fool for a client" would also fit the case in going before the Internal Revenue Service with an Offer in Compromise.

Any Authenticity To The Stories About Neglectful Taxpayers Who Settle Back Tax Debt For A Small Fraction Of The Original Amount?
Chances if you're a taxpayer, you've probably heard the stories about those lucky individuals who got one over on the IRS by getting a huge reduction on their delinquent taxes. Is this the stuff of urban legend, or is there a kernel of truth to these whoppers?

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