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WASHINGTON - The Internal Revenue Service today issued a consumer alert
advising taxpayers to beware of promoters' claims that tax debts can be
settled for "pennies on the dollar" through the Offer in
Compromise Program.
Such promoters make money by inappropriately advising
indebted taxpayers to file an application for an offer in compromise
with the IRS, promising unrealistic results, even when the taxpayers do
not meet the requirements of the program. This bad advice costs
taxpayers money and time.
Taxpayers may refer promoters who are using the program inappropriately
to the IRS's Office of Professional Responsibility for civil sanctions
by sending their complaint to: Office of Professional Responsibility (SE:OPR),
Internal Revenue Service, 1111 Constitution Avenue N.W., Washington, DC
20224.
An offer in compromise is an agreement between a
taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has
the authority to settle, or "compromise," federal tax
liabilities by accepting less than full payment under certain
circumstances.
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."
Although there are some tax practitioners who promote
dubious schemes, most practitioners give quality service to their
clients. Taxpayers who need a qualified tax professional to prepare and
submit their offer in compromise application form may contact state or
local tax professional associations to find enrolled agents, CPAs or
attorneys in their geographic area with the education and experience to
assist them.
The application package, IRS Form 656, Offer in
Compromise, was recently redesigned with new instructions, worksheet and
checklist to make it easier for taxpayers to determine if they are
eligible for the program and to accurately prepare the necessary forms.
The July 2004 revision of the application form also contains a new paid
preparer signature block. Taxpayers
may wish to reconsider using preparers who hesitate to identify
themselves on the form.
An offer in compromise may be considered only
after other payment options have been exhausted. If taxpayers are unable
to pay their taxes in full, there are other payment options, such as
monthly installment agreements, that must be explored before an offer in
compromise can be submitted.
For more information on Offer in Compromise >>
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