The Internal Revenue Service’s (“IRS”) Offer-in-Compromise program continues to be one of the most popular programs with both practitioners and taxpayers when they are considering a way to resolve their back tax issue. Yet, only 42% of Offers filed by taxpayers are ultimately accepted. Why are less than half of the Offers filed being accepted? Read more about common offer in compromise mistakes.
Mistake #1: Not Checking the Statute of Limitations
There is a ten-year collection statute. What this means is the IRS has ten years from the date it assesses the tax liability to collect that tax. Easy enough. However, taxpayers often do things that may toll or freeze the statute, preventing it from running. These actions include anything that prevents the IRS from taking collection action, including:
- Filing an Offer-in-Compromise
- Filing bankruptcy
- Filing a request for an installment agreement (payment plan)