Owed taxes

stu66701

I owe somewhere around $4000.00 - 5000.00 from about 3-4 years ago. I've tried to fill out the offer in compromise and it's too complicated. I don't know how i will ever be able to pay that off. I've also got medical problems, my house needs roof repairs and my car broke down and sold it to a junk yard. If i could somehow just get one return would help a lot but seeing as i owe i don't get anything back. Is the compromise and the one time forgiveness the same? I need help but also can't afford to get help if it's going to cost an arm and a leg

rachels

Hi stu66701,

When you say "one time forgiveness," I believe you are referring to penalty abatement. A penalty abatement and an offer in compromise are two different things.

1.A penalty abatement is not a forgiveness of the tax itself. Instead, it is when the IRS forgives certain penalties related to your tax return. Two penalties that can be waived are the failure to file penalty and failure to pay penalty. Remember, this option is typically only available if you have a history of good tax compliance. You are considered to have a good tax compliance history if you:

• Filed the same return type, if required, for the past 3 tax years before the tax year you received the penalty.
• Didn't receive any penalties during the prior 3 years, or any penalty was removed for an acceptable reason other than First Time Abate

For more information, please see: https://www.irs.gov/payments/penalty-relief-due-to-first-time-abate-or-other-administrative-waiver

If you need to request a penalty abatement, you can do so by filing Form 843, or you can call the phone number listed on the IRS letter you received informing you of your penalties.

2.An offer in compromise is when the IRS allows you to settle your tax debt for less than the full amount owed. Meaning, this is not just a waiver of penalties, but a reduction of the tax you end up paying. As an individual, you can submit form 433-A (OIC) to request an offer in compromise.

For more information on this option, please see: https://www.irs.gov/payments/offer-in-compromise

You can also contact the Taxpayer Advocate Service, an independent organization within the IRS meant to protect your rights as a taxpayer and help you with tax problems you can't resolve on your own. You can find the nearest office address and/or telephone number here:
https://taxpayeradvocate.irs.gov/contact-us

KristineS

Hi Stu66701.

The Offer in Compromise (OIC) is frequently referred to as one time forgiveness. Most people do not qualify for the OIC, and yes, the application is very long and detailed, and easy to get confused. You can use the OIC Pre-Qualifier tool to get a preliminary understanding if you qualify or not. Hiring someone to help you fill out the OIC application will likely cost money.

The IRS does not release refunds as long as there is a balance due. Unfortunately, penalties and interest also continue to accrue while there is a balance on your account. To get ahead of your debt, you may need to consider a combination of decreasing your cost of lifestyle and/or increasing income to pay it off faster.

If you're not already in a payment plan with the IRS, you can apply for one here. If your monthly expenses are significant for your income, you may qualify for Currently Not Collectible (CNC) status. Your debt will not go away, but a temporary pause on collecting the debt (usually a year) will allow you to focus on your personal needs.