Sometimes, though not often, US expatriates after filing all past returns discover the owe a large amount of taxes penalties and interest to the IRS. These taxes may be attributable to income earned before becoming an expatriate and living outside the USA. These taxpayers often ask us about filing an offer in compromise.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We consider your unique set of facts and circumstances:
- Ability to pay;
- Income;
- Expenses; and
- Asset equity.
The IRS generally approves an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time. You should explore all other payment options before submitting an offer in compromise because current statistics indicated only about 15% of thosefiled are accepted by the IRS. The Offer in Compromise program is not for everyone. If you hire a tax professional to help you file an offer, be sure to check his or her qualifications. There are many advertisements on TV that offer this service but generally only take a large nonrefundable down payment when it is clear your offer in compromise will not be accepted by the IRS.
Make sure you are eligible
Before we can consider your offer, you must be current with all filing and payment requirements. You are not eligible if you are in an open bankruptcy proceeding.
We have help many expats file successful offers in compromise. We do not accept filings that do not have a good chance of being accepted by the IRS.
