THIS IS VERY IMPORTANT: take the IRS' advice from a Press Release it issued on February 3, 2004, "beware of promoters' claims that tax debts can be settled for 'pennies on the dollar' through the Offer in Compromise Program." Do the preliminary work yourself by following the steps in this article to see if you might qualify, if you can do it yourself, or if you need the help of a local professional.
The IRS actually will help you
The IRS has prepared a pretty good booklet about its Offer in Compromise program. Go to this booklet and review the Table of Contents carefully. A link to the booklet is found below. After defining what an Offer in Compromise is, this booklet has its own Steps to follow to try to help you understand the program. Follow them slowly and carefully. Start with Step One to determine if you should even bother going any further. If not, don't waste your time and especially your money to hire an attorney.
Follow the Steps from the offer in compromise booklet carefully
Step Three in the booklet walks you through how to calculate the amount of your offer. This will likely require you to fill out Form 433-A which you will find on page 35 of this 46-page booklet. If you also own a business, you will have to fill out Form 433-B, starting on page 41, as well. After you have filled out Form 433-A (and Form 433-B, if necessary), you can enter you financial information on a worksheet on page 7 to determine what IRS deems your reasonable collection potential (RCP). This is a critical step, as probably 95% of offers must at least meet this RCP.
Finish following the steps in the booklet, and you're ready to file your offer in compromise.
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