An Offer in Compromise is a program designed by the IRS to determine your ability to pay. The IRS will evaluate your monthly income versus your allowable expenses and then determine a monthly disposable income. The IRS will use this amount in addition to calculated formulas that include assets and will determine an acceptable amount that they are willing to accept to settle the debt in full. Once an Offer in Compromise is accepted by the IRS, they will in most cases set up an affordable monthly installment agreement with the taxpayer. Not every taxpayer will qualify for an Offer in Compromise. There is no guarantee from any firm or professional that the IRS will accept an Offer in Compromise to settle your debt. This is strictly up to the IRS after your eligibility requirements have been met. If your offer is accepted and an installment agreement is initiated, you must strictly adhere to the agreement and keep your installments paid on time or your agreement will be void. If this happens, you may be indebted for the entire original amount plus interest and fee assessments. The first step is we need to look at what your monthly income is versus your monthly allowable expenses and the difference between those two equals your monthly disposable income. The second step is your offer equals your monthly disposable income in an algebra formula plus your assets and that equals the amount of your offer. It’s really not magic, it’s just numbers, it’s an analysis. When we do an analysis of your situation, we’ll help you to determine if you qualify. Certainly not every taxpayer qualifies for an Offer in Compromise and that’s what actually makes us different than the national tax resolution companies out there. There are actually offer mills. Their salespeople will tell you that you qualify for an Offer in Compromise no matter what as long as you go ahead and come up with a credit card number today and that’s how we’re a little bit different. I wanted to do this video to debunk some of those myths and see if we can’t help some of you from being victims to some of these unscrupulous companies.
Under certain circumstances the IRS may make another form of offer to you which is known as a short-term deferred offer. In this offer the IRS will assess your ability to pay and make an offer to defer collection on the account if you initiate an installment agreement. Typically the monthly installment amount is higher than the monthly ability to pay amount that the IRS calculated. This offer is usually made to taxpayers who indicate that they have the ability to earn extra income in effort to settle the debt in a shorter time frame. Occasionally, the IRS will suggest a long-term deferred offer. This offer is under unique circumstances and rather than explain the intricate details it would be best to have your Ellis & Brown, LLC representative see if this is an acceptable solution for your circumstances.