First, it is important to understand that not everyone qualifies for this type of resolution. Certain tax companies imply in their advertising that anyone can get pennies on the dollar, and this is simply not true. The IRS has very strict guidelines on who can get an Offer, and it is determined by a set of calculations based on your income, assets and expenses.

Another question many people have is whether the amount of their Offer is related to a percentage of what you owe. The answer to this would be no, as the amount is calculated by what the IRS determines is your “collectability”. A person owing $200,000 could make an Offer of $500 and get it accepted, or a person owing $20,000 could have to pay $5,000. It all depends on what kind of income and assets you have.

Some people ask, “Can’t I just walk into my local IRS office with a cash offer?” Unfortunately, it doesn’t work that way. Preparing an Offer in Compromise is a complicated procedure which can take anywhere from 6 months to a year to complete.

Another common question is, “Can I do it myself?” This is much like trying to represent yourself in court- you “can” do it, but most people would agree that in order to get the best outcome, you would entrust it to a specialized professional. The percentage of accepted Offers for people filing on their own is less than 10%, whereas Lothamer’s acceptance rate, for example, is well over 95%. Not only are your chances of success much greater when seeking professional assistance, but because of our expertise we are able to get you the lowest possible settlement amount. For every dollar you are off in your calculations, it will cost you $14 in your final Offer… that’s an expensive margin of error!

Ultimately, the best way to find out if you are a good candidate for an Offer in Compromise is to get an evaluation from a professional. Make sure you are speaking with a CPA, who will be fully qualified to assess your situation, and not just a sales agent. If you do qualify, a CPA should be able to estimate approximately how much your Offer would be and how much it would cost to prepare; at that point, you can analyze the potential savings and make a decision as to how to move forward.  For more information or to read about actual clients for whom we’ve gotten settlements, please visit www.lothamer.com.

 There are many reasons people get behind on their taxes.  Some anticipate a refund, and put off the chore of filing because they know they won’t owe.  While the IRS doesn’t penalize those getting refunds for filing late, there can still be consequences.

Many of our clients come to us with several years of back taxes unfiled.  It’s always sad when we file 6 or 7 years of back tax returns, and several thousand dollars of refunds are disallowed due to expiration.  Did you know that your right to claim a refund will expire three years from the due date of that tax return?  In other words, if you had a refund due to you for 2005, it expired on 4/15/09.  There are also expirations on the stimulus payments we receive.  Even if you usually owe, you want to make sure to file promptly, because stimulus payments will be credited against your balance, reducing your liability. 

If you haven’t filed because you’re missing documents, or are overwhelmed by the task of filing many years’ worth of back returns, we can assist you; just get in touch with us through the website or on the phone.

Lothamer is a professional firm of Certified Public Accountants, and was founded by Jesse I. Lothamer, J.D., C.P.A. in 1978. The firm specializes in Tax Representation and Tax Problem Resolution, and has helped thousands of clients settle their tax problems with the IRS and State of Michigan. We not only solve tax problems, but we also show clients innovative ways to get current. With offices across the State of Michigan, Lothamer is Michigan’s leading Tax Resolution Firm, and will continue to provide the general public with tax representation and tax problem resolution for a wide variety of tax problems.

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