Korntved & Associates
Your Place For Solutions To Tax Problems.
Internal Revenue Service: Offer Solutions vs. Collection
Solutions.
An
offer in compromise with the Internal Revenue Service is almost always better
than any proposed solution through collections for a number of reasons.
·
Any ‘solution’
offered through collections is ALWAYS a payment plan which leaves little or no
flexibility.
·
Any proposed
payment plan with an offer can be coupled with funds designation. That means
the payments can be applied to the tax portion only, which pays the plan down
much sooner. Payment plans with collections have funds going to the penalties
and interest before the tax, which causes a much longer term.
·
An offer can be a
cash payment (considered as five or fewer payments) or a payment plan - which
allows much greater flexibility in settlement.
·
An offer can be
for significantly less than the amount owed.
The
law changed in July, 2006 regarding payment plans. Plans are only collected
over the life of the collection statute now. Prior law allowed collection
beyond the statutes which had people paying for many years. Frequently, the
amount owed grew during the payment plan because of this.
Any
old law payment plans should be stopped NOW in lieu of an offer (with or
without a payment plan) or a payment plan in collections pursuant to the new
law!