It is sometimes possible to wipe your tax slate clean at a big discount. If you qualify for something known as the offer in compromise, referred to as an "offer" or "OIC," the IRS has been known to accept as little as 1% of the total owed on a tax liability and call it even.

There is no legal right to have a convincing tax demand reduced by the IRS -- it is entirely a matter of government discretion. In all but some examples the IRS must at least give a correctly submitted OIC fair consideration. Sadly , less than 1/2 of the OICs submitted are accepted by the IRS, though you do have a right to take a denied OIC to the IRS Appeals Office. You will ask, what are my rights when owing back taxes. The most effective way to reply to this question is to hire a professional.

The first reason to hire an experienced professional is to take the puzzle out of the process. Secondly, in most situations, hiring a professional will really save you cash.

In a standard collection case, the solution is an installment agreement or an Offer in Compromise. To do either of these, the IRS will use a set of formulas to establish how much you can pay every month. If you are not acquainted with these formulas, you could end up showing an ability to pay greater than what you actually have. Do not expect the IRS to indicate your mistake!

If you've got the capability to pay $100 per month and you complete the forms incorrectly, or rely on IRS "advise", you might finish up paying hundreds a month more than this. A normal engagement to agree an installment agreement costs from $350 to $700. If you made a $200 each month error on the forms -- then hiring us would pay for itself in just about three months. Otherwise, you could end up paying the extra $200 per month for years and years. If you are making a $200 error on an Offer in Compromise -- it might cost from $9,600 to $12,000 relying on how the Offer is to be financed. A standard Offer engagement costs less than one tenth of that. Is it really worth it to save a hundred greenbacks up front?

FAQ: what are my rights when owing back taxes
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