Qualification Criteria: What the IRS Evaluates
The IRS applies strict criteria when evaluating Offer in Compromise applications, and understanding these requirements is crucial for success.
Ability to Pay forms the foundation of most Offer in Compromise evaluations. The IRS examines your current monthly income minus allowable expenses to determine your disposable income. They also evaluate the equity in your assets, including real estate, vehicles, bank accounts, investments, and other valuable property. The IRS will also consider dissipated assets in the “recent” past in determining a taxpayer’s ability to pay. The IRS uses this information to calculate your "reasonable collection potential"—the amount they believe they can collect from you over time.
Equity in Assets includes the fair market value of everything you own, minus any loans or encumbrances secured by those assets. The IRS will require detailed valuations of real estate, vehicles, business assets, and other valuable property. Understanding how to properly value and present these assets can significantly impact your offer amount.
Income Analysis involves a thorough examination of your monthly income from all sources, including wages, self-employment income, rental income, investment income, and any other regular income streams. The IRS uses specific formulas and allowable expense standards to determine how much of your income is available for tax debt payment.
Allowable Expenses follow IRS standards that may be different from your actual expenses. The IRS has predetermined amounts for housing, transportation, food, clothing, and other necessities. Understanding these standards and how to document legitimate additional expenses is critical for presenting an accurate financial picture.
The Offer in Compromise Process: Step-by-Step Breakdown
Initial Evaluation and Preparation begins with a comprehensive analysis of your financial situation and tax debt. This includes gathering all necessary financial documentation, calculating your reasonable collection potential, and determining the appropriate offer amount. Proper preparation at this stage is essential for success.
Form Submission and Application Fee requires completing complex IRS forms and providing extensive financial documentation. Form 656 (Offer in Compromise) and Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals) or Form 433-B (Collection Information Statement for Businesses) must be completed accurately and thoroughly. The IRS also requires an application fee and an initial payment with your offer.
IRS Review Process can take six months to two years or longer. The IRS will verify the information you provided, may request additional documentation, and will assign your case to an Offer Examiner. During this time, most collection activities are suspended, providing you with breathing room while your offer is under consideration. One additional consideration to take in account when filing an Offer in Compromise is the filing of tax liens and the tolling (pausing) of the Collection Statute Expiration Date (“CSED”) of your overall tax liabilities. For example, if the CSED will run in 2 months on $100,000 of old tax debt, a taxpayer should consider the timing of when to file an Offer in Compromise.
Acceptance, Rejection, or Counteroffer represents the possible outcomes of the IRS review. If accepted, you must comply with the payment terms and future filing requirements. If rejected, you may have appeal rights. The IRS may also propose a counteroffer, which you can accept, reject, or negotiate further.
Appeals Process if Rejected provides an opportunity to present your case to the IRS Appeals Office if your initial offer is denied. This independent review can often result in a more favorable outcome, especially when you have experienced representation advocating for your position. Understanding the tax appeals process and your appeal rights for denied offers is crucial for maximizing your chances of ultimate success.
Offers Filed for Delay Purposes: The IRS may determine that an Offer in Compromise was submitted solely for delay purposes and therefore deny your Offer in Compromise. It is important to hire competent tax professionals that have represented Clients before the IRS for their entire careers to help minimize the potential risk of having the IRS determine that your Offer in Compromise was prepared and filed solely for delay purposes. The more times you submit an Offer in Compromise, the likelihood that the IRS will deem that your Offer was submitted solely for delay purposes will dramatically increase.
Success Rates and the Importance of Professional Representation
The statistics surrounding Offer in Compromise applications highlight the critical importance of experienced representation. According to IRS data, only approximately 25% of submitted Offers in Compromise are accepted. However, this statistic includes many offers that are improperly prepared or submitted by taxpayers who do not actually qualify for the program. It is important to hire the professionals at Michelle Turpin, PC to help you properly prepare an Offer in Compromise. Similarly, it is important to hire a competent tax professional who will be honest and upfront with you about why you will not currently qualify for an Offer in Compromise.
Why Most Offers are Rejected includes common mistakes such as offering too little money, failing to provide complete financial information, mathematical errors in calculating reasonable collection potential, and submitting offers when the taxpayer does not actually qualify for the program. Many taxpayers and other tax professionals also underestimate the complexity of the required forms and documentation.
The Value of Experienced Representation becomes clear when you consider that tax attorneys specializing in Offers in Compromise achieve significantly higher acceptance rates. Experienced representatives understand how to properly value assets, calculate reasonable collection potential, present financial information favorably, and negotiate with IRS personnel effectively.
Required Forms and Documentation extend far beyond the basic application forms. Supporting documentation may include bank statements, asset valuations, income verification, expense documentation, tax returns, and various IRS forms. The quality and completeness of this documentation often determines the success or failure of your offer. Taxpayers with unfiled tax returns must bring their filings current over the last 6 years before submitting an Offer in Compromise, as compliance with all filing requirements is mandatory for eligibility. It is important to hire a competent tax attorney to represent you in your Offer in Compromise as we have seen some national firms that hold themselves out as “experts” file tax returns for the past 15 years for some of their clients, creating significantly more tax debt where the IRS would not have required more than 6 years of tax returns be filed.
Factors the IRS considers include your compliance history, your demonstrated ability to pay, the strength of your financial documentation, your future income potential, and your overall cooperation with the process. Understanding these factors allows experienced representatives to present your case in the most favorable light possible. The IRS also evaluates whether alternative settlement options might be more appropriate, such as Installment Agreements for taxpayers who can afford monthly payments and do not qualify for an Offer in Compromise.
Why an Experienced Attorney is Crucial for Your Offer in Compromise
Negotiating with the IRS through the Offer in Compromise process requires specialized knowledge of tax law, IRS procedures, and negotiation strategies that most taxpayers simply do not possess. The complexity of the application process, combined with the high stakes involved, makes professional representation not just helpful but essential for maximizing your chances of success.
The Complexity of IRS Negotiations
Specialized Knowledge Requirements encompass understanding IRS collection procedures, financial analysis techniques, asset valuation methods, and legal precedents that affect offer negotiations. Tax attorneys who specialize in Offers in Compromise have spent years learning these complex procedures and stay current with changing IRS policies and requirements.
Understanding IRS Internal Procedures provides a significant advantage in negotiations. Experienced representatives know how IRS Offer Examiners evaluate cases, what documentation they require, how they calculate reasonable collection potential, and what arguments are most persuasive in securing acceptance. This insider knowledge comes only from years of experience handling hundreds of cases.
Avoiding Common Pitfalls that doom many offers includes understanding the nuances of financial disclosure requirements, knowing how to properly value assets, avoiding mathematical errors in calculations, and understanding when to submit an offer versus pursuing other resolution options. A single mistake in any of these areas can result in rejection of an otherwise valid offer.
Michelle Turpin, P.C.'s Unmatched Expertise
Tax Attorneys with Over 100 Years of Cumulative Experience exclusively practicing tax law provides our clients with a depth of knowledge and experience that is simply unmatched in Utah or anywhere else in the country. Our team has handled virtually every type of tax controversy and has seen every possible variation of Offer in Compromise cases.
Enrolled Agent on the Team provides additional expertise in IRS procedures and taxpayer representation. Enrolled Agents are federally licensed tax practitioners who have demonstrated their knowledge of tax law and are authorized to represent taxpayers before the IRS in all matters.
Of Counsel Attorney with Former IRS Experience gives our team unique insight into how the IRS evaluates offers from the inside. This former IRS attorney understands the thought processes, priorities, and decision-making criteria that IRS personnel use when reviewing offers, providing invaluable strategic advantages. This experience is particularly valuable for complex cases involving business tax issues, payroll tax debt, and Trust Fund Recovery Penalties.
Deep Understanding of Tax Law and Procedural Rules allows our attorneys to identify legal issues, procedural problems, and strategic opportunities that less experienced representatives might miss. This comprehensive knowledge base translates directly into better outcomes for our clients.
Personalized Service from Senior Attorneys
Direct Access to Experienced Attorneys ensures that your case receives attention from seasoned professionals rather than being handled by paralegals or junior staff. When you work with Michelle Turpin, P.C., you communicate directly with the attorneys managing your case.
Customized Strategy Development recognizes that every Offer in Compromise case is unique. Our attorneys take the time to understand your specific financial situation, tax history, and personal circumstances to develop a strategy tailored to your needs and designed to achieve the best possible outcome.
Comprehensive Case Management includes handling all communication with the IRS on your behalf, ensuring that deadlines are met, responding to IRS requests promptly and thoroughly, and keeping you informed about the progress of your case at every step.
Michelle Turpin, P.C.'s Comprehensive Offer in Compromise Services
Our full-service approach to Offer in Compromise representation ensures that every aspect of your case receives expert attention, from initial evaluation through final resolution.
Thorough Eligibility Evaluation and Offer Calculation
Comprehensive Financial Analysis begins with a detailed examination of your complete financial picture. Our attorneys review your income from all sources, analyze your monthly expenses, evaluate your assets and liabilities, and assess your future earning potential to determine whether an Offer in Compromise is the best resolution option for your situation.
Accurate Asset Valuation requires expertise in determining the fair market value of real estate, vehicles, business assets, and other property. Our team knows how to properly value assets for Offer in Compromise purposes, which often differs from valuations for other purposes. Proper valuation is critical because overvaluing assets can result in an offer amount that is too high, while undervaluing assets can lead to rejection for inadequate documentation.
Reasonable Collection Potential Calculation involves complex formulas that take into account your monthly disposable income multiplied by a specific number of months, plus the equity value of your assets. Our attorneys understand these calculations intimately and know how to present your financial information in the most favorable light while maintaining complete accuracy and honesty.
Strategic Offer Amount Determination requires balancing multiple factors to arrive at an amount that is both acceptable to the IRS and manageable for you. The offer must be large enough to demonstrate good faith and meet IRS expectations, but not so large that it defeats the purpose of seeking debt reduction.
Expert Application Preparation and Submission
Meticulous Form Completion ensures that all required IRS forms are completed accurately and thoroughly. Forms 656, 433-A, 433-B, and other required documents must be prepared with precision because errors or omissions can result in rejection or delays that may extend the process by months or years.
Comprehensive Documentation Assembly involves gathering and organizing all supporting documentation required by the IRS. This includes financial statements, asset valuations, income verification, expense documentation, and any special circumstances that support your offer. Our attorneys know exactly what documentation is required and how to present it most effectively.
Strategic Presentation of Financial Information can significantly impact the success of your offer. Our attorneys understand how to highlight factors that support a lower reasonable collection potential while ensuring complete compliance with IRS disclosure requirements.
Professional Submission and Follow-Up includes submitting your complete application package to the appropriate IRS office, confirming receipt, tracking the progress of your case, and responding promptly to any IRS requests for additional information.
Direct IRS Negotiation and Communication
Experienced IRS Communication protects you from making statements or providing information that could hurt your case. Our attorneys handle all communication with IRS personnel, ensuring that your rights are protected and that all interactions support your objective of obtaining offer acceptance.
Professional Relationship with IRS Personnel developed over decades of practice allows our attorneys to communicate effectively with Revenue Officers, Offer Examiners, and other IRS personnel. These professional relationships, built on mutual respect and competence, can facilitate more productive negotiations.
Strategic Response to IRS Requests requires understanding what the IRS is really asking for and how to provide responsive information without volunteering unnecessary details that could hurt your case. Our attorneys know how to satisfy IRS requirements while protecting your interests.
Negotiation of Terms and Conditions may be necessary if the IRS proposes a counteroffer or requests modifications to your original offer. Our attorneys are skilled negotiators who understand how to work with IRS personnel to reach acceptable terms.
Comprehensive Appeals Management
Appeals Process Expertise provides a critical second chance if your initial offer is rejected. The IRS Appeals Office operates independently from the compliance divisions and often takes a more practical approach to case resolution. Our attorneys have extensive experience with the appeals process and understand how to present cases effectively at this level.
Independent Appeals Review offers an opportunity to present additional evidence, clarify misunderstandings, and negotiate alternative resolutions. Appeals Officers have more flexibility than Offer Examiners and may be willing to consider factors that were not adequately addressed during the initial review.
Strategic Appeals Arguments require understanding both the legal and practical aspects of your case. Our attorneys know how to identify the strongest arguments for appeals and how to present them in a way that is most likely to result in acceptance.
Alternative Resolution Exploration may be appropriate if an Offer in Compromise is not ultimately achievable. Our attorneys can help you explore other options such as Installment Agreements, Currently Not Collectible status, tax penalty abatement, or collection appeals that may provide relief.
Addressing Common Offer in Compromise Challenges
Even well-prepared Offers in Compromise face common challenges that can derail the process without experienced representation to address them proactively.
Overcoming Documentation and Valuation Issues
Asset Valuation Disputes frequently arise when the IRS questions the values assigned to real estate, business assets, or other property. Our attorneys know how to obtain professional appraisals when necessary, how to support valuation positions with comparable sales data, and how to negotiate valuation disputes with IRS personnel.
Income Verification Challenges can occur when your income fluctuates, when you have complex income sources, or when your recent income is not representative of your ongoing earning capacity. Our attorneys understand how to document and explain income variations in a way that supports your offer amount.
Expense Documentation Requirements often surprise taxpayers who must provide detailed proof of claimed expenses. The IRS has specific standards for allowable expenses, and our attorneys know how to document legitimate expenses that exceed these standards and how to present them persuasively.
Special Circumstances Documentation may be necessary to support claims of economic hardship, health problems, advanced age, or other factors that support your offer. Our attorneys know what documentation the IRS requires and how to present special circumstances effectively.
Managing IRS Communication and Requests
Responding to Information Requests requires understanding exactly what the IRS is asking for and providing responsive information without volunteering details that could hurt your case. Our attorneys manage all IRS communication to ensure that your responses are appropriate and strategic.
Handling Examination Interviews may be required as part of the offer review process. These interviews can be conducted in person, by telephone, or through correspondence. Our attorneys prepare you thoroughly for any required interviews and may represent you during the interview process.
Managing Timeline and Deadlines is critical because the IRS imposes strict deadlines for responding to requests and providing additional information. Missing deadlines can result in withdrawal of your offer, and our attorneys ensure that all deadlines are met promptly.
Addressing IRS Concerns and Objections requires understanding the underlying reasons for IRS questions and developing appropriate responses. Our attorneys have the experience to anticipate common IRS concerns and address them proactively.
Ensuring Post-Acceptance Compliance
Understanding Compliance Requirements is essential because acceptance of an Offer in Compromise comes with ongoing obligations that must be met to avoid default. Our attorneys ensure that you understand these requirements and have systems in place to maintain compliance.
Filing Future Tax Returns Timely is a mandatory requirement for all accepted Offers in Compromise. You must file all required tax returns and pay all taxes due on time for five years following acceptance. Our attorneys can help you establish procedures to ensure ongoing compliance.
Making Required Payments according to the terms of your accepted offer is obviously critical. Whether you choose a lump sum payment or periodic payments, our attorneys help ensure that you understand and meet all payment obligations.
Monitoring Compliance Status continues throughout the five-year compliance period. Our attorneys can provide ongoing guidance to help you maintain your compliance status and avoid any actions that could result in default of your accepted offer.
Why Choose Michelle Turpin, P.C. for Your Offer in Compromise?
When your financial future depends on successfully resolving overwhelming tax debt, choosing the right representation can make the difference between acceptance and rejection, between relief and continued financial stress.
Unmatched Experience and Expertise
Over 100 Years of Cumulative Experience exclusively practicing tax law provides our team with a depth of knowledge that simply cannot be replicated. Our attorneys have handled thousands of Offer in Compromise cases, encountering virtually every possible variation and challenge that can arise during the process.
Former IRS Experience on our team provides invaluable insight into how the IRS evaluates offers from the inside. This perspective allows us to anticipate IRS concerns, understand their decision-making processes, and develop strategies that address their priorities effectively.
Full-Service Capability means that we can handle every aspect of your tax situation, from basic compliance issues to complex litigation. Whether your case requires routine negotiation or sophisticated legal arguments, our team has the expertise to achieve the best possible outcome.
Complex Case Success demonstrates our ability to handle the most challenging tax situations. We have successfully resolved cases involving multiple tax years, substantial debt amounts, complex asset structures, and difficult financial circumstances that other representatives might consider impossible.
Personalized Attention from Senior Attorneys ensures that your case receives the focus and expertise it deserves. Unlike firms that delegate important work to paralegals or junior staff, your case will be handled directly by experienced attorneys who understand the nuances of Offer in Compromise representation.
Strategic Advantages and Proven Results
Utah Focus with Nationwide Capability provides the best of both worlds—deep knowledge of local tax issues combined with the ability to represent clients throughout the United States in federal tax matters. Our understanding of Utah's business environment and tax landscape gives us additional insights that benefit our clients.
"We Fight the IRS to Achieve the Best Possible Outcome for You" is not just a slogan—it is our commitment to aggressive, effective representation that puts your interests first. We understand that you are facing one of the most stressful situations imaginable, and we are committed to achieving the best possible resolution for your circumstances.
"Don't Deal with the IRS Alone" reflects our understanding that tax controversies are too complex and the stakes too high for taxpayers to handle without professional representation. The IRS has teams of trained professionals working on every case—you need experienced advocates working just as hard for your interests.
Proven Track Record of successful Offer in Compromise negotiations demonstrates our ability to achieve favorable outcomes even in challenging cases. Our success rate with Offer in Compromise applications is significantly higher than the national average because we only recommend offers when they are appropriate and we prepare them thoroughly.
Comprehensive Service and Support
Virtual Consultation Capabilities allow us to assist clients throughout Utah and across the United States regardless of location. We use secure technology to conduct confidential consultations and manage cases efficiently while maintaining the personal attention that our clients deserve.
Attorney-Client Privilege Protection ensures that all communications with our firm are protected by the highest levels of legal confidentiality. This protection allows you to discuss your situation openly and honestly without concern about disclosure to the IRS or other parties.
Transparent Communication keeps you informed about the progress of your case at every step. We explain complex legal concepts in understandable terms, provide regular updates on case developments, and ensure that you understand your options and the likely outcomes of different strategies.
Ethical and Professional Standards guide every aspect of our practice. We adhere to the highest standards of legal and professional ethics, ensuring that your case is handled with integrity and in full compliance with all legal requirements.
The Michelle Turpin, P.C. Difference
Boutique Firm Advantages provide the personalized attention and specialized expertise that larger firms cannot match, combined with the experience and resources necessary to handle the most complex cases. You will work directly with senior tax attorneys who understand your situation and are committed to your success.
Exclusive Tax Law Focus allows us to stay current with the latest developments in tax law, IRS procedures, and settlement strategies. This specialization translates directly into better outcomes for our clients because we understand the nuances and complexities that general practice attorneys might miss.
Client-Centered Approach recognizes that every case is unique and every client deserves individual attention. We take the time to understand your specific circumstances, develop customized strategies, and work tirelessly to achieve the best possible outcome for your situation.
Long-Term Relationship Building extends beyond resolving your immediate tax crisis. We provide ongoing guidance to help you maintain compliance with post-acceptance requirements, avoid future tax problems through strategic tax planning, and achieve long-term financial stability.
Privacy Assurances and Attorney-Client Privilege protect all communications with our firm. You can discuss your situation openly and honestly, knowing that everything you tell us is protected by the highest levels of legal confidentiality.
No Obligation Assessment means that you can learn about your options without any commitment. We believe that informed taxpayers make better decisions, and we are committed to providing you with the information you need to choose the best path forward.
Take Action Today: Schedule Your Confidential Consultation
If you are struggling with overwhelming tax debt, waiting will only make your situation worse. The IRS continues to assess penalties and interest on unpaid balances, and collection actions can begin without warning. The sooner you take action, the more options you will have and the better your potential outcome.
Free 15-Minute Consultation with Experienced Tax Law Firm
Schedule your free 15-minute confidential consultation today to discuss your tax situation.
Contact Information and Next Steps
Phone: (801) 685-0552
Text: (801) 685-0552
Contact Us Form: Click here
Email: info@taxlawsolutions.com
Virtual Consultations Available for clients throughout Utah and across the United States. We use secure technology to provide the same level of personalized service regardless of your location.
Salt Lake City Office: 4764 South 900, East Salt Lake City, UT 84117
St. George Office: 162 N. 400 E St., Suite A-204, St. George, UT 84770
Why Immediate Action is Critical
Time-Sensitive Opportunities may be available to resolve your tax debt, but these opportunities can disappear quickly. The IRS has specific statutes of limitations for collection actions, and understanding these deadlines is critical for developing an effective strategy. To learn more about all five IRS settlement options available to resolve tax debt, we encourage you to schedule a consultation.
Preventing Escalation of collection actions requires proactive engagement with the IRS. Once you have professional representation, we can often halt aggressive collection actions while we work to resolve your debt through an Offer in Compromise or other settlement options.
Protecting Your Assets from levy, seizure, or other collection actions requires immediate professional intervention. Our attorneys can take emergency action to protect your bank accounts, wages, and prevent property seizures while we develop a long-term resolution strategy.
Peace of Mind comes from knowing that experienced professionals are working to resolve your tax problems. You can focus on your family and business while we handle the complex negotiations with the IRS.
Don't let tax debt control your financial future any longer. Whether you need comprehensive tax help or specific assistance with an Offer in Compromise, contact Michelle Turpin, P.C. today to schedule your confidential consultation and take the first step toward resolving your tax problems permanently.
The sooner you act, the more options you will have. Contact us today at (801) 685-0552 or email info@taxlawsolutions.com to get started.
DISCLAIMERS
Results vary by case. Every tax situation is unique, and past results do not guarantee future outcomes. The success of an Offer in Compromise depends on many factors, including the specific facts of your case, your financial situation, and your compliance with IRS requirements.
This content does not constitute tax advice. The information provided on this page is for general educational purposes only and should not be relied upon as tax advice for your specific situation. Tax law is complex and changes frequently, and the application of tax law to your specific circumstances requires professional analysis.
Consultation needed for specific guidance. Only through a confidential consultation can our attorneys provide advice tailored to your specific tax situation. We encourage you to schedule a consultation to discuss your circumstances and learn about your options for resolving tax debt.
Michelle Turpin P.C. assumes no liability for actions taken in reliance upon the information contained herein. Each person should consult their own tax attorney, business advisor, or tax advisor with respect to matters referenced in this content. Of course, we think it best you call us for all of your tax related legal issues.
Further Reading: Official IRS Resources
For additional information about Offers in Compromise and related tax resolution options, we recommend reviewing these official IRS resources:
Offer in Compromise Information
Required Forms and Applications
Collection Process and Taxpayer Rights
Appeal Rights and Alternative Options
These official IRS resources provide authoritative information to help you better understand the Offer in Compromise process and your rights as a taxpayer. However, given the complexity of tax law and the high stakes involved, we strongly recommend consulting with experienced tax attorneys before making any decisions about your tax debt resolution strategy.
