Is it really possible to pay the IRS "pennies on the dollar" and have the rest of your tax bill forgiven? Yes – it is possible...but it's not very likely. It's called an Offer-In-Compromise and it used to be the only legitimate way to negotiate an actual lowering of the amount of taxes owed to the IRS by a taxpayer...sometimes far less.
However, since the IRS has seen so much "abuse" of this particular method of tax relief in recent years, they have shown by their actions that they are less and less apt to accept an Offer-In-Compromise.
In a press release dated October 2004, the IRS stated "This program serves an important purpose. But we do warn taxpayers to watch out for unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program's requirements," said IRS Commissioner Mark W. Everson.
"Taxpayers should not be duped by high-priced promises." In fact, as of 2006, the IRS now rejects 85% of all Offers-in-Compromise.
While an Offer-In-Compromise is one option for paying off IRS debt, it may not be the right option for you. There's no sense in pursuing this payment option with 15% success rate if there's little hope that it will be accepted.
In fact, if you choose to hire a lawyer to represent you before the IRS, it's critical that he is looking out for you and only wants the best outcome for your case. Since the IRS only accepts 15% of Offers-In-Compromise, any good lawyer representing you must have a full knowledge of all other options available through the IRS. Plus, they would need to be able to thoroughly examine your case before they ever made a suggestion of the best action to take.
There's a New Plan Available: The new Partial Payment Installment Agreement (PPIA) enacted in January of 2005 is a form of payment that may allow you to pay off your taxes and have part of the debt forgiven. With this new method, the IRS considers how much you owe before the 10-year statute of limitations runs out.
Legally, a tax professional can represent you to the IRS even if they live thousands of miles away from you. But is that what you want when you're dealing with something as stressful as IRS problems?
Or would you rather have someone who you can speak with face-to-face...who lives in your city.....who has a reputation to uphold in your community?