Going through a tax audit is every bit as stressful as it sounds. If you find yourself in this position, you shouldn't hesitate to learn more about what's going on. This will allow you to make informed and confident decisions as the days go by.
Don't be surprised if your audit turns up that you owe additional money. In a perfect world, you'd have enough money to pay this in full to put your troubles in the past once and for all. However, this is not always the case.
If you owe the IRS money and don't have the means to pay it off, you may want to consider making an offer in compromise. This allows you to eliminate your tax bill for less than what you actually owe.
The IRS does not accept every offer in compromise it receives, but that doesn't mean you shouldn't learn more. If the IRS has reason to believe accepting your offer is the best way to settle the debt, they're open to hearing you out.
Here are the factors the IRS looks at when deciding if it should accept or deny your offer in compromise:
- Your ability to pay the tax bill in its entirety
- Your current income
- Your current expenses
- The value of your assets
You will not qualify for an offer in compromise unless you are current with all filings. Also, you will not qualify if you are going through the bankruptcy process.
An offer in compromise is not the ideal situation, as you'll still have to make a lump sum payment to the IRS, but it may be better than getting stuck with a bill you are unable to pay.
If you decide that this is best for you, complete an application for an offer in compromise and send it to the IRS along with your filing fee.
Once you do this, it's time to sit back and wait for a response. If everything checks out, you can make the necessary payment to put your trouble in the past for good.