How effective is offering an offer to compromise to the IRS yourself. Is a tax lawyer needed?

Question

My tax debt is very high, with no ability to repay due to health. I need to get this resolved.

Answer 1

The Offer-in-Compromise is very tough to obtain (less than 17% were approved last year). You can fill out a Form 433A and Form 656 and submit 3 months of bills and proof of income to try and do it yourself. I don't recommend it. I urge you to hire a CPA, Enrolled Agent, or Attorney. Not all CPAs, EAs, or Attorneys do Offer work. You need someone with experience.

Whatever you do, don't hire some company that advertises on TV that they "can settle for $20" or some web ad that says "save 99% on an Offer." Hire a local person or if outside your area, a good professional, not some "tax resolution" company.

IRS is getting very tough. Don't ignore IRS letters. Before you can qualify for an Offer you must have all tax returns filed and you must be current on 2006 taxes. A new law is going into effect that will require a downpayment with any Offer.

Answer 2

Initially you could contact your local IRS office and set up an appointment to talk with an agent or just walk in to see one. Explain your situation. Explain that there is no way you can pay the debt and to do so would create an "economic hardship" on you. The agent can help you file any forms necessary. If you don't get the right result there are tax advocacy folks who can help you with your case. Look in your local phone book.

Answer 3

I work with a local tax firm. The IRS will work with you as long as you dont try to avoid them or lie to them. You can write a hardship letter to the IRS stating you are unable to pay due to heath related problems. This can possibly lower or even elimidate the debt you owe. You can also set up payment plans with them. . They will as you to make an initial payment (make as much as you can) and the rest you can pay in installments. Whereever you live, there are local tac firms that may be willing to help you with this. Also I can suggest you call the TaxPayer Advocacy Hotline @ 1-888-912-1227 I really hope this helps.

Answer 4

I am a recent accounting graduate and from what I have learned in a recent tax class, the IRS is very lenient when it comes to the ability to pay. If you can prove that the taxes would cause and undue hardship, I don't think you will have a problem getting your tax slate cleared.

Answer 5

The IRS has officers for that task and they are all you need.
Getting lawyers or a CPA involved it will only complicates things and add costs.
You If you deal with the IRS directly on this matter you will find its not nearly as bad as you imagine.

Answer 6

A lawyer would probably be very useful on this one. I think you can do it yourself, but you would be much better off with someone that knows the tax system and how to deal with the IRS.

Er, and I hate lawyers in general, but I think for your question, you need one.

-Dio

Answer 7

Not a tax lawyer, try a tax advocate. With the right circumstances the debt can be forgiven.

Answer 8

If you hire someone with experience you are more likely to get a better deal than if you went on your own. They know how much you can get and will be less likely to take a bad deal. It really depends on your own personal variables.

Answer 9

It doesn't hurt to try, but using a lawyer isn't the answer, I honestly would first try an accountant that you are familiar with. You will be very suprised at his or hers answer.

Answer 10

You might want to consider speaking with CPA. Their rates can be much less than an attorney and plus they are just as knowledgeable.