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New Offer in Compromise Program Update

August 8th

As of June 2011 the Internal Revenue Service has developed a means of streamlining their Offer in Compromise program. This update is intended to increase the efficiency of the program by making it easier to complete the application process. The program now also makes it simpler for taxpayers to settle their tax debts by allowing them to pay what they can afford.

The Offer in Compromise program allows taxpayers to settle their tax debt for less than the actual amount. Previously, the process of qualifying was highly complex. Many taxpayers were rejected because the IRS believed they were able to pay their taxes in full immediately or were able to handle a longer-term payment plan. In fact, traditionally the majority of applications for an Offer in Compromise were rejected.

So How Will The Streamlining Update Help Taxpayers?

Now, under the new streamlining update, the program ought to have more broad appeal. Due to the current economic problems faced by many Americans the IRS has relaxed its requirements for acceptance to the program. This means that more applicants than ever before will be able to settle their tax debts for less than their worth

In addition, the application process has been greatly simplified. The amount of financial information required is not as detailed as has previously been the case. Also, certain additional details can now be given over the telephone rather than by mail.

How Can a Taxpayer Qualify for This Program?

The Offer in Compromise program is open now to any person that receives a wage, is self-employed, or is unemployed that receives less than $500,000 in gross receipts in a calendar year. The applicant’s entire household income must be less than $100,000 per year and their total tax debt cannot exceed $50,000.

If the taxpayer meets the above conditions and can confirm that they are unable to pay their tax debt in full, that person could qualify for the new streamlined Offer in Compromise program.

However, despite increased simplicity, the process is still relatively complicated and applicants should consult the help of a tax professional. The assistance of such a firm can reduce the chance of rejection due to errors or omissions on the application paperwork.

 
 
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