QUESTION:
I used to own a small business that I ran as a sole proprietor. That business owes some payroll taxes and I owe some personal income taxes. Since the business is no longer operating, do I have to include the business taxes in my offer in compromise, or can I submit an offer just for my personal income taxes?
ANSWER:
The taxes you must include in an offer in compromise depends on the type of offer submit to the IRS. If you submit an offer based on doubt as to liability where you assert that you are not the entity or person liable for the taxes you only include those taxes and years that you are questioning. More commonly, however, an offer is submitted based on doubt as to collectibility, meaning the taxpayer does not have the money to pay the taxes in full, or the offer is submitted based on effective tax administration where due to some extreme hardship it would be in the government’s best interest to accept an offer in compromise even though the taxpayer has enough income or assets to theoretically pay the taxes in full. If the offer is submitted based on either of these two bases, it must include all taxes for which the taxpayer is liable. Therefore, your offer in compromise should include your personal income taxes and all business liabilities. Your initial consultation is free and you will be under no obligation. The sooner you take action to solve your tax or other debt problem, the sooner you can rest easy and cease worrying about those taxes and debts! My firm also handles divorce, real estate, and probate matters. We also prepare wills, powers of attorney and provide other estate planning services. Please call today for a free consultation.