As a legal assistant, an Offer in Compromise is a legal agreement between a taxpayer and the Internal Revenue Service (IRS) to settle a tax liability for less than the full amount owed. The IRS is willing to accept an Offer in Compromise when it is unlikely that the taxpayer can pay the full amount owed, and the Offer in Compromise is the best way to collect the maximum amount of tax revenue in the shortest time possible.
To be considered for an Offer in Compromise, a taxpayer must meet certain eligibility criteria, such as being current with all tax filings and payments. The taxpayer must also demonstrate that they cannot pay the full amount owed, either through a one-time lump sum or a series of payments over time.
If accepted, the taxpayer will have the opportunity to settle their tax liability for less than the full amount owed. The terms of the Offer in Compromise will be specified in a written agreement between the taxpayer and the IRS, and will typically require the taxpayer to comply with specific conditions, such as filing and paying all future taxes on time.
It is important to note that an Offer in Compromise is not a guaranteed solution and may not be the best option for everyone. Before pursuing an Offer in Compromise, it is recommended that taxpayers consult with a licensed attorney or tax professional to determine if it is the right choice for their specific financial situation.
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