I am self employed and owe 15k in back taxes and was wondering if those "settle your tax bill for pennies on the dollar" firms work or not. I know they use a legitamate IRS action to do it called an Offer in Compromise, but is it worth paying a company to do it when I cold possibly do it myself?
2007-07-15 04:02:37 · 3 answers · asked by outofsorts2 2 in Business & Finance ➔ Taxes ➔ United States
Keep in mind that if they settle with the IRS for 99¢ on the dollar they've delivered on their promise.
An Offer in Compromise will only be accepted by the IRS if you clearly substantiate that there is no possible way for you to satisfy the debt. It is not automatic and a significant portion of the applications are rejected.
The mechanics of the application aren't difficult from a technical standpoint but you have to lay your entire financial picture wide open for close scrutiny by the IRS. Consultation with a local CPA or EA with OIC experience would be highly recommended. You don't want to be dealing with an overpriced firm that may be half a continent away.
Get the OIC package from the IRS website. Here are some links:
http://www.irs.gov/pub/irs-pdf/f656.pdf
http://www.irs.gov/pub/irs-pdf/f656a.pdf
http://www.irs.gov/pub/irs-pdf/f656l.pdf
http://www.irs.gov/pub/irs-pdf/f656ppv.pdf
I would suggest that you review the requirements and start gathering data for the OIC. Then get a consultation with a local CPA or EA with the data in hand and see what they have to say.
2007-07-15 04:45:48 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Do not call one of the firms that advertises on TV or Radio. Their upfront fees are generally thousands of dollars and they don't have any higher of success rate in getting the IRS to accept the OIC. Overall, the IRS rejects over 80% of them.
Contact a CPA or EA in your local area and find one that has experience filing an OIC.
2007-07-15 07:20:50 · answer #2 · answered by Wayne Z 7 · 1⤊ 0⤋
They are in business (not in charity business) to make money. You would end up paying more in the end since you have to give them profit for services rendered. You can make installment payment plan with IRS. Fill out the form and make workable arrangement with IRS directly. Cut down your spending down to half the current level. Increase your earnings by getting a second job. You will be debt free in the near future.
2016-05-18 01:47:14 · answer #3 · answered by ? 3 · 0⤊ 0⤋