For Arizona Taxpayers With Large Tax Debt- Will Bankruptcy Be Better Than Offer In Compromise?
Offer in Compromise Versus Bankruptcy?
Americans have always been good at two things. Solving problems and selling products that solve problems.
We have become especially adept at selling products that work for some, but not for most.
Think "Rogaine". For some...hair. For everyone else some new "fuzz" or nothing at all.
Americans with bald spots want their hair back so badly though, they buy in droves despite the easily ascertainable and mostly negative results.
They buy because of a polished sales pitch that provides them hope.
Strangely, our national obsession with selling products to those in pain, has found it's way to the world of tax debt.
The tax solution providing hope to thousands of Americans is the the IRS' “offer in compromise” program (“oic”). Savvy salespeople have realized that there are lots of Americans with tax debt who don't sleep well as a result. They offer the oic as a solution thousands of times every day on tv and radio.
The promise: "Settle your IRS tax debt for far less than what you owe easily and often guaranteed.
The problem: most taxpayers with serious tax debt aren't good candidates for the program.
Via the oic program, the IRS is statutorily empowered to accept less than what they are owed if there is
1. a doubt that they are actually owed the money
2. if there is a doubt about whether the debt that is owed is actually collectible from the taxpayer, or
3. the taxpayer can afford to pay the debt and taxpayer owes the debt, but there is some other circumstance about the taxpayers life that should be taken into account in settling the debt.
Most taxpayers pay these “sales” organizations to file an oic based on a doubt as to the taxpayer’s ability to pay. Many of those do so out of a hope that they will be able to sleep again. For the vast majority who do so, a short peaceful interlude without is interrupted when they find the offer has failed.
