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Offer in Compromise and Tax Settlements

The Offer in Compromise program is administered by the IRS and various state agencies in order to assist the tax collection agencies in the reasonable administration and collection of tax debts that may never be settled.

An offer is essentially an agreement that settles outstanding tax liabilities for a fractional amount of the actual liability that is owed. The acceptance of offers is completely at the discretion of the taxation agency, which will not accept them unless the amount offered by the taxpayer is larger than or equal to their collection potential over the time the agency has to collect the tax. The taxing entities look at the taxpayer’s assets, current and future income as well as earning potential when calculating a taxpayer’s collection potential. Special exceptions are made for taxpayers with severe financial hardship or other extenuating circumstances. However, in tough economic times, offers are often difficult to get accepted without the assistance of counsel – the last statistics published suggest that the offer acceptance rate was less than twenty percent.

If you have any questions or if we can further assist you, please contact our San Diego Offer in Compromise attorneys.

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