Escape Route

Playing by the rules

Keep in mind that the IRS will not agree to an installment agreement or an OIC offer if you are delinquent on your current tax year's liability. You will not be allowed to pay off an old obligation and create a new one in its place, says Halt. In addition, the IRS requires that you comply with all tax filing and payment requirements for five years after an OIC is accepted. If you don't file all returns and pay all the taxes you owe over this time period, the IRS can default on the OIC, and the collection enforcement procedures will begin again.

Getting IRS approval for an offer requires a good deal of documentation and often a long wait. Even so, if you can work out a compromise that essentially lets you pay less than you owe, the time and effort will be well spent.

Don't think that an offer will automatically stop IRS collection proceedings, however. If you filed for an OIC simply to delay collection of the tax, the tax agency will keep its collection notices coming. If you have an installment agreement in place before submitting a compromise offer, you must continue those payments while your offer is being considered.

Making amends with the IRS can be difficult, but it's not impossible. The key is to develop--and implement--a realistic plan. Says Halt, "Take a proactive stance, and don't bury your head in the sand when it comes to an outstanding tax bill."

Like this article? Get this issue right now on iPad, Nook or Kindle Fire.

This article was originally published in the November 1997 print edition of Entrepreneur with the headline: Escape Route.

Loading the player ...

5 Secrets for Making Your Logo Stand Out

Ads by Google

Share Your Thoughts