Offer In Compromise

“OMG,” we whisper, as we stumble out of our tax preparer’s office in a daze. We knew we were probably going to end up owing a little more to the IRS this year, but we weren’t expecting a tax bill of $35,000. Who has $35,000 lying around? Not us, that’s for sure.

So...what do we do now? We don’t want to go all Martha Stewart and end up behind bars because we couldn’t pay our taxes.

Luckily, offers in compromise exist, and we plan on contacting the IRS posthaste to find out if we qualify. An “offer in compromise” is a program offered by the IRS to people who, like us, can’t afford to pay our taxes. If we make the grade, we might be able to settle on a significantly lower tax bill for the year.

Here’s how it works. We go online to the IRS’s website. We fill out a questionnaire. We provide a bunch of information, like our income and assets and expenses and whether or not we’re currently in the process of filing for bankruptcy. And once we do all that, the website will tell us whether or not we qualify for an offer in compromise. If we don’t, we’ll either need to come up with some type of installment plan, or we’ll have to start selling off our valuables, like the silver tea service and the children, to pay off that debt. But if we do qualify, we can keep the tea service and the children, which will undoubtedly make Grandma happy, and just work on paying our much-reduced tax debt.