When the IRS informs you that you owe them money, ignoring them is not an option. Yet, as these can often be large sums, you may not have the means to pay your bill. If business has been down lately, you might feel that you will never be able to pay it. Yet, it will not disappear on its own. What is more, the longer you do nothing about it, the more the debt will grow as interest accrues on it.
The principal goal of the IRS is to get money in. It knows that if your outstanding tax bill forces you to shut up shop, you both lose. It stands more to gain by ensuring you can at least pay something.
What is an offer in compromise?
One option is to make an offer in compromise. It involves you going to the IRS and saying, “I can’t pay it all, but how about I give you this much, and we call it quits?”
Working out how much to offer and how to structure those payments is perhaps the most challenging part. If you offer too little, the IRS may reject you. If you offer too much, you may end up going out of business.
If you face a worrying tax demand, you may find it difficult to make the right decisions. Seek legal help to get a clear-headed assessment of your situation and understand all the options available. Applying for an offer in compromise is not something to do alone, nor is it the right solution for everyone. Yet, in some cases, it is your best chance of a successful resolution to this challenging situation.