The National Taxpayers Advocate Office recently reported that tax resolution is at an all-time high. According to statistics released in July 2013, the Internal Revenue Service (IRS) accepted 38% of all Offer in Compromise requests they received as of March 2012, the last month for which data is available. This figure is the highest one the IRS has noted in a number of years, and shows a 26% increase in acceptance rates over March 2011 figures.
The Office of the Taxpayer Advocate is a division of the IRS, reporting directly to its commissioner. The role of this office is to act in the best interest of taxpayers, and they submit a yearly report concerning their objectives to the House Ways and Means Committee.
An Offer in Compromise allows taxpayers to settle their debts with the IRS for less than the full amount. In determining whether an offer will be accepted, agents look at each person’s unique set of circumstances including income, expenses, assets and ability to pay. According to the official IRS website, the agency generally approves an offer whenever it “represents the most we can expect to collect within a reasonable amount of time.”
Part of the reason for high acceptance rates could be the fact that the IRS recently streamlined the process. There are now fewer requests for financial information than before. In addition, much of the information can now be provided by phone, thereby saving people time and money. The amount of time taxpayers are given to pay has also been increased to two years.
The IRS has also incorporated a more flexible approach to calculate whether or not these offers are reasonable. The agency believes that by doing so, they will be in a better position to begin collecting some of the approximately $59.3 billion that’s currently owed in the way of back taxes.
Many people believe that the new streamlined process will result in even higher acceptance rates for Offer in Compromise proposals in the future. If you owe a tax debt, now could be an excellent time to try to settle that burden with the IRS once and for all. Contact us to find out if an Offer in Compromise could help you do exactly that.