Many people know that an offer in compromise is a tax settlement with the Internal Revenue Service. But, why does the Internal Revenue Service and our government allow for such a tax settlement? In many respects, you could compare an offer in compromise to a bankruptcy. Of course, in a bankruptcy you are likely discharging or resolving multiple debts whereas an offer in compromise only resolves your tax debt with the IRS. Just as an individual or business can file bankruptcy in an attempt to get a “fresh start” an individual or business may be able to settle their taxes with the IRS, and wipe out past debt and thus obtain a “fresh start” with the IRS. Our government realized that in certain situations and circumstances, it is in the best interests of the government (and the taxpayer) to settle the debt. Why should the IRS spend time and money attempting to collect a tax debt from a taxpayer that will never be able to settle or satisfy the tax debt? In many respects, the time and effort of IRS revenue agents (and thus government money) is better spent working to collect the tax liabilities from those individuals and businesses that can pay the debt. Thus, in some respects, I feel it comes down to a practical matter and the general policy followed by our government in recovering past due tax dollars.
The video below has been prepared by a tax attorney at The McGuire Law Firm to discuss what he considers as some of the policy matters behind an offer in compromise.
To speak with a tax attorney in Denver contact The McGuire Law Firm. The McGuire Law Firm allows a free consultation so that you can discuss your tax matters, issues and/or problems with an attorney who can represent you before the Internal Revenue Service to resolve such issues. Further, a tax attorney can help you with tax planning matters and other tax issues. Contact The McGuire Law Firm today!