But the road to a fresh start with the IRS is not necessarily as simple as it may sound. The IRS has very strict criteria that they use to determine if a tax debt should be compromised. Before jumping in with a compromise, there is much you need to know about the IRS settlement process, including: – Whether you should even file an offer in compromise. For example, if the IRS has a limited time left to collect your debt (out of the 10 year period they are given by law), should you jump in or remain on the sidelines? Sometimes, it is better to hold ’em, but you need to know when. – What are your chances of success. The IRS rejects more comprises than it accepts, due in part to its rigorous financial guidelines that are used to determine if they should settle or if they believe they can get paid in full. Know if your your situation merits the time invested to settle ahead of time. – How to use the internal IRS criteria to negotiate the best settlement. It is important to know the IRS offer in compromise valuation formula before jumping in. Do you make too much to settle? What if you spend too much and the IRS wants you to cut your budget so you can pay them more? The IRS has specific formulas that are used in valuing a compromise that should be reviewed and applied to your situation before jumping in.
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