Offers in Compromise
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The Tax Practice of IIT Chicago-Kent College of Law
The Tax Practice of IIT Chicago-Kent College of Law


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Chicago Tax Lawyers for Offers in Compromise

chicago attorney for offer in compromise

Settle with the IRS for Pennies on the Dollar?

Over the last several years an entire industry has grown up promising you settlements with the IRS for a fraction of what you owe – "pennies on a dollar". You've seen it on television, heard about it on the radio, and no doubt encountered hundreds of these solicitations elsewhere on the internet. We refer to these tax debt relief companies as "offer mills", because they are volume-dealers, hastily putting numbers on IRS forms and submitting thousands of offers in compromise a month, most all of which get returned or rejected by the IRS or state agency because they do not present a convincing case of a taxpayer's inability to pay. And you may already know that these firms frequently charge a whole lot of money for their services.

Still, under the IRS Offer in Compromise (OIC) program it is possible to settle a tax debt for significantly less than the full balance owed; and in some cases, for pennies on the dollar. However, you need to understand from the outset that the OIC program is not primarily designed for the benefit of a taxpayer; an offer will typically only be accepted by the IRS if it provides more money than the agency will otherwise be able to extract from the taxpayer through enforced collection efforts over the years remaining on the statute of limitations. In other words, the offer has to be in the government's interests and to its financial benefit, not necessarily yours. Under the right circumstances, and for the right situation though, an accepted offer can provide a huge write-off to a taxpayer and an attendant fresh start, including the release of any tax liens filed.

There are actually three types of OICs recognized by the IRS: 1) OIC based on doubt as to collectability, under which the minimum acceptable settlement amount is based on a quantitative formula - the net value of a taxpayer's assets plus a multiple of his or her gross monthly income less allowable expenses; 2) OIC based on Efficient Tax Administration, under which the minimum acceptable amount is less than the quantitative calculation of collectability, based on consideration of a taxpayer's special circumstances, including specific economic hardship factors; and 3) OIC based on doubt as to liability, under which the settlement amount reflects the actual (lesser) amount of taxes due, rather than the amounts assessed and recorded on the IRS' books.

The Tax Practice of IIT Chicago-Kent College of Law has enjoyed great success with its submitted OICs because we do not put an offer into the system that we do not truly believe has a fair chance of being accepted. We are not an offer mill. If our client is not an OIC candidate, we suggest an alternative method for resolving the tax problem – there is always something that can be done to resolve the tax problem and make the situation better for our client. We begin by securing comprehensive financial information from our clients so as to more fully realize and present the true economic context, and we personalize every OIC by telling our client's unique story and history, all in an effort to maximize the likelihood that the OIC will be granted.

Why not just do this yourself, using the IRS "taxpayer friendly" interactive on-line application? If you are solely a W-2 salaried employee with minimal assets and little likelihood of an increased future income, you certainly can work through the IRS forms on line and submit the offer directly, without professional guidance. However, if your situation is more complex, involves defaulted installment agreements or imminent/pending levies, property valuations, related business or rental property issues, non-liable spouses, or special circumstances, I strongly recommend you obtain advice from a professional that is familiar with the constantly-changing Internal Revenue policies, standards, criteria, and enforcement initiatives.

Contact Our Chicago Tax Lawyers

Our proven success is based on immediate intervention, a personalized resolution plan, strong and long-standing professional relationships with agency employees, and a thorough knowledge of what the government can and cannot do. At the Tax Practice of IIT Chicago-Kent College of Law, you can rely on aggressive, ethical, and personalized representation – I encourage you to make your problem our problem to solve.

Recent Examples of Successful Offers in Compromise

  • A professional return preparer who owed more than $200,000 in back income taxes and unpaid payroll liabilities settled his account with the IRS for $24,000;
  • A commercial real estate broker who accumulated more than $350,000 in unpaid income taxes because of his failure to make estimated tax payments on his commissions and capital gains settled his account with the IRS for $52,000;
  • A Chicago Public School teacher who was laid off and forced to withdraw her pension to live on settled her $85,000 liability for $4,200;
  • A former Chicago Board of Trade commodities broker settled more than $400,000 in unpaid income tax liabilities for $31,000.

Are You a Candidate for an IRS or State of Illinois Offer in Compromise?

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