Everything depends on the taxpayer’s unique financial situation. We start by preparing a financial statement that reflects the client’s income and assets.
How long does it take to complete an offer in compromise, from start to finish?
It all depends on how fast the IRS processes the offer. I tell clients it takes anywhere from 6 months to 2 years. The fastest that I’ve seen the IRS process an offer is 4 months. The longest was 2 and a half years.
Hiring a tax professional to prepare an offer in compromise can be expensive. What should clients expect to pay?
The price for an offer in compromise and other IRS representation services will vary. The more complex the case, the higher the fee for professional help. An offer in compromise, just by itself, will cost about $2,500, more or less, depending on how complicated the case is. However, clients oftentimes need more than just an offer in compromise. They may also need to prepare back taxes. So the total cost always depends on the complexity of the case and how much help the client needs.
Overall, it seems the offer in compromise program is a good option for taxpayers who have limited ability to pay off their tax debts in full. Are there any disadvantages to filing an offer in compromise?
The offer in compromise is one tool for handling tax debts. Taxpayers should consult with a tax professional to find out if any other tax debt strategy, such as an installment agreement or bankruptcy, is right for them. The biggest disadvantage to an offer in compromise is that filing an offer, delays the 10-year statute on collecting tax debts. The IRS has ten years to collect tax debts, but the ten-year period is suspended while the IRS is processing an offer in compromise. This means the IRS may have extra time to collect on tax debts if an offer in compromise is rejected.
Thank you for taking time today to talk about filing an offer in compromise and other tax debt strategies.
You’re welcome.
David A. Bauman has over 20 years of tax preparation experience, 15 years as a self-employed tax practitioner and five years as a Tax Manager for 1st Nationwide Bank. Mr. Bauman obtained his Enrolled Agent credential in July 1987 and has represented taxpayers before Federal and State Agencies for the last seven years in the area of collection representation. Assigned to the Special Assistance Group at JK Harris, Mr. Bauman represents clients involved in high dollar and more complex individual and business issues.
JK Harris & Company, LLC, based in North Charleston, S.C., is the nation's largest tax representation firm and has served over 175,000 customers since its founding in 1997 by John K. Harris. JK Harris consultants are available to meet with consumers in over 450 locations nationwide by appointment only. The company also provides services for consumer and commercial debt, student loan debt, investment fraud, financial planning, tax return preparation, and audit representation.
JK Harris can be contacted at
Web site: www.jkharris.com
Telephone: (888) 610-8293
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