Korntved & Associates
Your Place For Solutions To Tax Problems.
Internal Revenue Service: Offer Solutions vs. Collection
Solutions.
An offer in compromise with the Internal Revenue Service is almost always better than any proposed solution through collections for a number of reasons.
· Any ‘solution’ offered through collections is ALWAYS a payment plan which leaves little or no flexibility.
· Any proposed payment plan with an offer can be coupled with funds designation. That means the payments can be applied to the tax portion only, which pays the plan down much sooner. Payment plans with collections have funds going to the penalties and interest before the tax, which causes a much longer term.
· An offer can be a cash payment (considered as five or fewer payments) or a payment plan - which allows much greater flexibility in settlement.
· An offer can be for significantly less than the amount owed.
The law changed in July, 2006 regarding payment plans. Plans are only collected over the life of the collection statute now. Prior law allowed collection beyond the statutes which had people paying for many years. Frequently, the amount owed grew during the payment plan because of this.
Any old law payment plans should be stopped NOW in lieu of an offer (with or without a payment plan) or a payment plan in collections pursuant to the new law!