Preparing an accurate IRS Offer in Compromise is a lot of work. Before spending the time and money to have an Offer in Compromise prepared, there are 3 things that must be completed before the offer is submitted.
Bankruptcy – If you are in an active bankruptcy your Offer in Compromise will not be processed. You should wait until you receive your bankruptcy discharge before any IRS tax relief agreement is submitted.
Tax return filing compliance – All tax returns that are legally required to be filed must be filed before an Offer in Compromise is submitted. This includes all income tax, payroll tax and excise tax returns as well as returns for all corporation, partnership and limited liability companies you have an ownership interest in.
If you feel that if you do not have a filing requirement for any particular period, you must attach a detailed explanation with your offer. Examples of not having a filing requirement would be income below the required level to require the filing of an income tax return.
All required tax deposits must be brought current. All payroll tax deposits and returns must be paid for the current quarter. Also, if you are self employed, all required estimated tax payments must be paid up to date for the current year.
If you are not current with all return filings and tax deposits, you will be given one opportunity to bring them current.
If you submit an IRS tax relief agreement while in a bankruptcy or fail to bring all tax return filing requirements and tax deposits current, your Offer in Compromise will be returned and the $150.00 filing fee will be kept. In addition, the 20% deposit or first payment with your offer will be kept and applied to your tax liability.
In order to be sure all requirements have been met it is really to your benefit to hire a qualified tax professional to help you with your Offer in Compromise.