The IRS offer and Compromise program provides the opportunity to any individual, married couple, trust, corporation, limited partnerships, limited liability companies, foundations, associations and other non-profit organizations and estates, who are unable to pay off their tax debt in full, to get rid of their tax debts. It is by negotiation with the IRS and the tax professional that a final settlement amount is arrived at; which enables a tax debtor to erase their tax debts once and for all.

In addition penalties and interests can also be dealt with in the same way as is in the case of tax liability. In fact, while submitting an offer; all owed taxes, plus penalties and interest should be included in the offer to be considered. On the other hand, if the major concern is related to penalties, penalty abatement should be taken into consideration.

If you are an American struggling with paying your taxes the offer and comprimise program can be a great help to those people that are having trouble paying their tax obligations because of the current state of the economy.  To qualify for the IRS offer and comprimise program a taxpayer has to meet the following requirements of the IRS offer and comprimise program:

• Must have used the most current version of Form 656, “Offer and Compromise”, as per Feb, 2007 and Forms 433-A and 433-B, “Collection Information Statements,” as per January, 2008.
• Must have submitted the $150 application fee, and the 20% non-refundable deposit with Form 656 Offer and Compromise
• Must have filed all essential federal tax returns
• Should not be a debtor in a bankruptcy case
• Must comply with all federal must comply with all federal tax filing and paying requirements for a period of five years following acceptance of their Offer and Compromise, or until the Offer and Compromise is paid in full, whichever is longer, which also includes making required estimated tax payments and federal tax deposits

After you have completed all the above steps to qualify for the IRS offer and comprimise program it will take 6-12 months for the an offer and comprimise to be approved by the IRS.  If your offer and comprimise takes longer it is most likely because your offer and comprimise has been rejected and will be taken to appeals.

If you go bankrupt or have had a credit card charge written off it gets reported to the credit reference agencies.  lucky for people in tax debt a IRS offer and comprimise does not get reported to the credit referencing agencies.  A IRS offer and comprimise does not have a negative effect on your credit rating.  If you ignore your tax debts though the IRS will file a notice of a Federal Tax Lien, which goes through the county recorder and that WILL show up on your credit report.

You should always seek advice from a professional tax consultant that specializes in the IRS offer and comprimise program before you try to apply for yourself.  A IRS offer and comprimise application completed by a professional is much more likely to be approved rather than one that is not completed by an IRS offer and compromise specialist.