An "offer in compromise" is an offer of monetary compromise made to the IRS (Internal Revenue Service), under special circumstances, by those who are incapable of paying their tax debts.It is advisable that a tax defaulter hires an attorney before starting any procedures related to an offer in compromise. However, this is not a legal requirement and a person can also file for an offer in compromise without hiring an attorney.
When a person gets an inquiry call from the IRS about his or her financial details, then lying to them is illegal but making changes in the financial layout after telling them the truth is legal.
A person should avail of an "offer in compromise" only if he/she is really entitled to it. If a person does not earn, has no assets that can be sold and is definitely incapable of paying off his/her tax liability even in the foreseeable future, then he/she can expect a favorable response to an application for an "offer in compromise." There are many lawyers who offer to represent people in this kind of a situation but the applicant must make sure that a credible and reputed lawyer is hired for the purpose.
The Wall Street Journal has quoted the executive director of IRS, Dale Hart that "firms which make 'misleading claims' often charge excessive fee for handling a client's 'offer in compromise.'"
Proper care should be taken while filling out form 656 because the acceptance and rejection of this form by the IRS, among other factors, depends on the correctness and completion of this form. The IRS accepted only 17% of the total number of submitted forms in the year 2002.
If an applicant is planning to get married, then a pre-nuptial agreement stating and proving the independence and separateness of the spouse's wages will help in protecting the income of the spouse. Leasing a property instead of buying it will make it more secure if an applicant wants to benefit from "an offer in compromise." Most attorneys who are experienced in this field can best explain the finer points and legal complications involved in an offer in compromise.
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