The benefits of an offer in compromise
An offer in compromise is a process by which taxpayers can settle their tax liabilities for less than the full amount owed. The offer in compromise process can be complex, and taxpayers are advised to seek professional assistance in submitting an offer. However, there are several benefits to pursuing an offer in compromise:
1. Reducing the amount of tax you owe. An offer in compromise can reduce the amount of tax you owe by allowing you to settle your tax liability for less than the full amount owed.
2. Avoiding collection actions. If you cannot pay the full amount of taxes you owe, the IRS may take collection actions against you, such as wage garnishment or seizure of assets. An offer in compromise can stop or delay these collection actions.
3. Avoiding litigation. If the IRS rejects your offer in compromise, it may file a lawsuit against you to collect the full amount of taxes you owe. A successful offer in compromise can avoid this litigation.
4. Reducing penalties and interest. The IRS may reduce the penalties and interest that you owe on your tax liability as part of an offer in compromise.