IRS Offer in Compromise — December 2010, reviewed January 2013

Times have been tough for many people.  It may be because of unemployment or from other challenges of the economy.  Some may even be concerned about outstanding bills and one bill may be with the IRS!

The IRS does have some options available to help people with their tax obligations due to unemployment or other financial problems.  One of the options is called an offer in compromise.  This is an agreement between a taxpayer and the IRS that settles the taxpayer’s debt for less than the full amount owed.

IRS employees are permitted to consider a taxpayers current income and potential for future income when negotiating an offer in compromise.  Normally, the standard practice is to judge an offer amount on a taxpayers earning in prior years.  Since March of 2010 this greater flexibility has been allowed.  The IRS may require that a taxpayer entering such an offer in compromise to agree to pay more if the taxpayer’s financial situation improves significantly.

Where do you find this help?  The IRS has toll-free telephone assistance lines and regularly scheduled hours at local Taxpayer Assistance Centers.  Minnesota IRS Taxpayer Assistance Centers are located in Bloomington, Duluth, Mankato, Minneapolis, Rochester, St. Cloud and St. Paul.

To find the closest Taxpayer Assistance Center or for more information on help available to unemployed taxpayers in dealing with past due tax payments check out the IRS website at www.irs.gov.  There is a toll-free number as well.  It is 1-800-829-1040.