Denver Tax Lawyer Discusses Offer in Compromise Calculation

How much can I settle my IRS tax debt for?  I have heard, and answered this question many many times.  Of course, this is a common question for an individual or a business owner that owes taxes to the IRS.  My answer is always, “it depends.”  This is because the amount that the IRS will accept for an offer in compromise to resolve a tax debt is based up an equation related to a taxpayers ability to pay and not necessarily the total amount of the taxes owed to the IRS.  The IRS calculates an offer in compromise based upon a taxpayer’s reasonable collection potential which correlates to a taxpayer’s equity in assets and disposable income.  In regards to equity in assets this includes all assets from your home, car, retirement account, jewelry and anything and everything you own.  You may be able to receive a deduction in the fair market value of an asset for certain assets.  In calculating disposable income, the IRS will look at total income and your expenses, but they have established allowable expenses for items such as food, clothing, housing, utilities, transportation and other expenses.

The video below has been prepared by a Denver tax lawyer to provide additional information regarding the calculation of an IRS offer in compromise.  If you have a tax debt to the IRS and are questioning your ability to settle such debt, speak with a Denver tax lawyer at The McGuire Law Firm through a free consultation.