Question: I would like to submit an offer in compromise, but I have heard that the process is similar to an audit and that I will have to provide a lot of documents to the IRS.  What kind of information would I have to provide if I file an offer in compromise?
Answer: There are three types of offers in compromise, but the offer based on doubt as to collectability is the most common and is what we will address here.  Basically, an offer in compromise based on doubt as to collectability means that you know you owe the taxes, but you do not have the money to pay the taxes to the IRS and you want them to accept a smaller amount.  When you file this type of offer you will need to provide a Form 433-A that is a financial document listing all assets that you own and your income and expenses.  This form also asks for proof of the values you listed so you will need to provide documents like a recent appraisal of the real estate that you own, Blue Book sheets for your vehicles, three months of account statements from banks and other financial institutions.  You also need to provide proof of medical expenses such as doctors’ bills, a printout from the pharmacy showing how much you have spent this year on medications, mortgage statements, and utility bills.  This information all has to be sent with your offer in compromise application and usually is required to be updated throughout the offer in compromise process.  We would use this information to determine if you qualify for an offer in compromise and the IRS will use the information to determine whether they will accept your offer.  If you would like to discuss your case, we offer a free, no obligation consultation.  Please call our office today to schedule that meeting.  We can also assist you with estate planning, probate and real estate matters.  Please call today for your free consultation.