Whether it’s a credit card bill or a home mortgage, most lenders will work with you if you need more time to make your payment. Surprisingly, the IRS has a similar arrangement, known as an offer in compromise. To get financial relief this year, learn more about this tax resolution service, its participation qualifications, and how to apply.

What’s an Offer in Compromise?

An offer in compromise is an arrangement between a taxpayer and the IRS, where you agree to pay a certain percentage of your outstanding tax debt. This amount is based on your income, your assets, and the debt’s initial collection date.

With this tax resolution service, there are two options. With a deferment, you make payments for 12 months until the amount is paid in full. On the other hand, the lump sum option allows you to pay the agreed-upon amount within five months, beginning with a 20% down payment. However, individuals who meet low-income guidelines can request a waiver of the down payment.

What Are the Qualifications?

To qualify for this tax resolution service, you must meet one of three conditions. First, your income and assets must be less than the total amount of your tax bill, and the IRS must determine that collection may be impossible. Second, if there's a dispute on whether you owe the amount in question, you may qualify. Third, you may be eligible if paying the full amount will cause significant financial hardship.

When Should You Apply?

You can apply for an offer in compromise at any time. Once you've submitted the required IRS forms and fee, you'll receive a letter acknowledging your request and the date when an examiner will review your case. Once the review process starts, the examiner will go over your income, assets, and other finances to determine if you qualify. This may take 30 to 60 days. After that, there will be a judicial review and an official acceptance if your request is approved. If it's denied, you can file an appeal.

If your tax debt is becoming more than you can handle, contact ZP Tax, Inc. in Silver Spring, MD. They have the expertise needed to help you navigate through the offer in compromise process. To schedule an appointment, call (301) 587-4829. For additional information about their services, visit their website.