You should consider submitting an offer in compromise if you have a significant financial hardship and you are unable to repay your IRS debt within the time frame granted under the IRS Collection Statute, i.e. 10 years from the date the tax was assessed. You should note that it is difficult to meet the criteria of an offer in compromise and it requires a complicated asset and equity determination., The IRS may agree to settle your tax debt for less than the amount you owe if you qualify for its offer in compromise program. Before you apply for an offer in compromise, you must do the following:


file all tax returns that you are legally obligated to file
make estimated tax payments for the current tax year
business owners with employees must file federal tax deposits for the current quarter , You are ineligible to file for an offer in compromise if:


you or your business is in a open bankruptcy proceeding
you have the financial resources to pay your owed taxes in a lump sum or through a payment plan , You should consider hiring a tax attorney or tax specialist to assist you with the offer in compromise. It can be a confusing and difficult process without professional assistance. In order to apply for an offer in compromise you need the following:


to complete and file IRS Form 656, Offer in Compromise
self employed or a wage earner must complete and submit IRS Form 433-A.
if you are filing for your business, complete and submit IRS Form 433-B.
submit a $186 application fee, unless you can certify that your income is less than 250% below the Department of Health and Human Services poverty guidelines submit an initial offer of payment unless you can certify that your income is less than 250% below the Department of Health and Human Services poverty guidelines , If your offer in compromise is accepted, you must make the agreed upon payments to the IRS. If your offer in compromise is rejected, you may appeal the decision within 30 days by filing Form 13711, Request for Appeal of Offer in Compromise.
Determine if you should submit an offer in compromise.
Meet the pre-application requirements for an offer in compromise.
Determine if you are ineligible for an offer in compromise.
Apply for an offer in compromise.
Make Payments or Appeal Rejection.
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