Okay I am filling out a letter in compromise for what I owe the IRS and I have to make an offer to them for what I owe, does anyone have any idea what percentage I should offer them, half, 75%, 30%. What will they accept?
2007-09-24 06:35:05 · 5 answers · asked by amanda m 3 in Business & Finance ➔ Taxes ➔ United States
I am an enrolled agent who prepares these for clients including two today. There is no easy answer and no set answer. The average, not that that means much, is 17% but I got an offer on quarter million dollar liability accepted at 1 cent on the dollar. Some others have been non-starters. Every one is different. Your actual situation might dictate an entirely different approach including getting the whole account put on ice for a few years.
The essay question answer is "an amount that represents the reasonable collection potential of the account." This is a lump sum equal to what you could get from the equity in all your assets if they were sold at a quick sale, generally 80% plus 48 times what you could pay monthly on an installment agreement.
For example, if you had a car with a private party sale value of $10,000 and owed $5,000 on it and nothing else and IRS says you could make payments to IRS of $100 per month you would have to offer 80% of $10,000 minus the $5,000 owed = $3,000 PLUS 48 times $100 = $4,800 for a total of $7,800. You could make up to 24 monthly payments but would have to increase the 48 monthly payments to 60 for a total offer amount of $9,000 at $375 per month. How someone who could only pay $100 per month could be expected to pay $375 is a mystery.
Your own situation may be more complicated, and it probably is if you add a home and a 401(k) plan and a car that will be paid off in just a few years, you would have to go through these gyrations with every asset.
If you want to hire a professional representative--enrolled agent, CPA or attorney--stay away from the ones that advertise on cable TV. Their fees can be heart stopping.
2007-09-24 11:37:47 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Letter Of Compromise
2016-12-16 05:04:32 · answer #2 · answered by ? 4 · 0⤊ 0⤋
What they will accept is based on your assets plus what you could afford monthly for the next 4 years.
Go to IRS.gov and do search for "Offer In Compromise". The "form" for these offers is 64 pages long. Making an offer isn't as simple as writing a letter. It is a long drawn out process that takes up to two years. Even when everything is properly done, the IRS says "No" over 80% of the time.
Also, generally offers are only accepted when you owe over $10,000. If you owe under $10k, the offer will probably be rejected. Get on an installment plan and stick to it.
2007-09-24 06:53:25 · answer #3 · answered by Wayne Z 7 · 2⤊ 3⤋
I really recommend you read the article I found below. This will give you loads of information. Below is another link I found and should you decide to use a professional service they may be able to help you in the negotiation process.
FOXNews.com - How to Negotiate With the IRS Over Back Taxes - Tax Help | Reduction | Information
http://www.foxnews.com/story/0,2933,248187,00.html
http://irs-problemsolvers.com/whatwedo.html
2007-09-24 06:44:51 · answer #4 · answered by Anonymous · 0⤊ 0⤋
That's a good question!
2016-08-24 17:17:45 · answer #5 · answered by Anonymous · 0⤊ 0⤋