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Make the IRS an Offer It Can't Refuse

Are you unable to meet your tax obligations with no recourse in sight? One possible solution is to submit an "offer in compromise" to the IRS. If you can show extenuating circumstances and the IRS accepts the offer, you do not have to pay the full amount of tax owed.

To qualify under the offer-in-compromise program, you must provide the following information to the IRS:

* The amount of taxes owed;

* Your Social Security number and name of your employer;

* Your marital status;

* An explanation of your circumstances;

* The reasons why the full amount you owe isn't collectable;

* The source of funds for paying the amount you are offering.

The IRS may reject your offer if it thinks you are offering less than what you can pay. If the offer is rejected, the IRS may include a counteroffer it would find acceptable. Otherwise, you are free to make another offer or appeal the rejection. The written appeal must be sent within 30 days of the date of receiving the rejection letter and provide all the documentation provided to the IRS when making the compromise offer.

When an offer is accepted, you are expected to make all payments and file all future returns on time. If you don't, the IRS can cancel its acceptance of your offer in compromise. Then you will have to pay the full amount that was originally due plus penalties and interest.

With guidance from a professional tax adviser, you can propose an offer that stands a good chance of being accepted.

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