The Good Tax Guide

Many people will be audited in the next few years, and from this they will find out that they may owe the IRS a huge amount of money. It is a time of worry and constant budgeting as they strive to figure out just how to pay the IRS. However, there is a shed of hope for these people. These people are usually offered an offer in compromise (OIC), this is basically like Debt Management Plans in that these offerings give a reduced amount that the person owes, which allows them to pay it off much faster and be less worried.

There are three reasons for why the IRS will offer a person an OIC. The first being that the IRS is doubtful that they will ever be able to pay back the amount that is owed. An example, a small business that has a net worth of $50,000 is going to find it nearly impossible to pay back $2.5 million in taxes. Therefore, the IRS will offer them a reduced amount to pay back since they will get some of their money this way.

Secondly, the money that is in question that is considered owed, may be considered doubtful by the person who owes the money. For example, a company who utilized a certain person for their taxes, years later, after the person has left the firm, they are audited and it is found that they did not provide the correct information about a certain aspect of their taxes. The person can then claim that they are not at fault simply because another person did their taxes and perhaps they did not know the extent of the law regarding the matter.

Third of all, if the person can show that if they were to pay the entire amount that they owe that they would fall into economic hard times, such as losing their home, business and so on , then the IRS could issue an OIC. Recently, this has been the most used reason for obtaining an OIC, and probably will be for years to come as it is the most prudent to the current economy.

Payment wise, the person can pay all that they owe up front or they can set up some type of payment schedule. Contrary to popular belief, the IRS is not out to get everyone. In many circumstances they will work with the person to make sure that the person is not getting cheated of anything because of one tiny mistake, and their families do not suffer because of their mistake either.