What Is an Offer in Compromise Lawyer and How Much Do They Charge?
Learn How to Get the Best Help Possible for Your Tax Troubles
The offer in compromise program is available to taxpayers that cannot pay off their entire tax liabilities in full and are likely not able to pay back the entire balance before the statute of limitation expires. Taxpayers can also qualify for an offer if there is doubt to the liability.
Only about 30% of all filed offers in compromise filings are accepted each year. Generally, this number is so low because of individuals filing without the assistance of a qualified tax professional. A good offer in compromise lawyer will know if you are likely to qualify before they begin any work.
An offer in compromise lawyer will look closely at your unique situation. They will help you determine if you might qualify to settle your tax bill for less than you owe, and then, they will guide you through the process.
To get help from an experienced offer in compromise attorney — contact us at The W Tax Group today. Where we employ the best. We can start with a free consultation and help you find the best option for your situation.
This guide will explain what an offer in compromise attorney does, how much they charge, and some tips on choosing the best professional for help.
What Is an Offer in Compromise Lawyer?
An offer in compromise attorney is a tax lawyer with experience setting up offers in compromise. Keep in mind that the legal field is extremely wide. Lawyers focus on all kinds of things. Whether you’re writing a will, getting a divorce, fighting a criminal case, or applying for an offer in compromise, you need an lawyer who specializes in that area of the law.
Tax attorneys specifically focus on helping their clients with tax issues. They help clients apply for offers in compromise as well as other IRS programs. They also represent clients who are dealing with tax crimes such as tax evasion or tax fraud. They are the best choice when you need help negotiating with the IRS.
How Much Do Attorneys Charge for an Offer in Compromise?
The cost of an offer in compromise can vary. The lawyer’s fee typically depends on the complexity of your financial situation and the amount of your tax liability.
When you apply for an offer in compromise, you have to share extensive financial details with the IRS. If you only have a few assets and some consumer debt, making a financial disclosure isn’t that complicated. In contrast, the process is a lot more complicated if you own a business, have multiple income streams, or own a lot of assets and investments. The statute of limitations on your tax liability and calculation of your reasonable collection potential are important factors as well. This complexity and those factors can influence and drive up the cost.
The fees generally range from $3,000 to $6,000 for the filing of an offer in compromise. Generally, an experienced tax lawyer will be able to assess the complexity prior to taking you on as a client and can fairly estimate the cost. Some lawyers will give flat fee pricing upfront for all the work to be done and others may charge by the hour.
Additionally, if you have unfiled returns, you will have to file those before you can apply for the offer in compromise. These types of issues also affect the attorney’s fees for the offer in compromise.
However, it’s important to realize that the cost of an offer in compromise attorney is an investment. They know how to navigate the system and get you the best deal possible.
What Does an Offer in Compromise Cost?
Besides paying the lawyer fees for an offer in compromise, you also have to pay the IRS’s application fee. As of 2022, this is $205. Then, if the IRS accepts your offer, you must either make a lump sum payment or pay the offer within two years.
Do I Need a Lawyer for an Offer in Compromise?
In most cases, it’s extremely advantageous to work with an offer in compromise attorney. The IRS offer in compromise program has strict rules, guidelines and financial criteria required to qualify. The application process is also extremely detailed. If you make mistakes or don’t include the right information, your offer may be rejected. If you have attempted to file an offer in compromise on your own and it was rejected, a qualified tax lawyer can help appeal the rejected offer in compromise.
Tax lawyers deal with the offer in compromise program on a regular basis. They know exactly what information the IRS wants to see, and they know how to make compelling arguments for their clients. They also know when to guide people toward other tax resolution options.
However, a tax lawyer is not the only option. Enrolled agents and CPAs can file for an offer in compromise as well. These two types of professionals can represent you to the IRS. Alternatively, you can apply for an offer in compromise on your own, or you can contact a tax relief company (which may employ lawyers, enrolled agents and CPAs).
How to Tell If Someone Can Really Help You with an IRS Offer in Compromise
Dealing with the IRS can be extremely stressful. Its processes are complicated. Its rules are confusing, and its notices are scary.
Who can you trust to help you with an offer in compromise? As you look for someone to help you apply for an offer in compromise, keep these tips in mind.
1. Watch out for companies that make promises they can’t keep.
Some tax companies often tell people that they will automatically qualify for an offer in compromise without understanding the person’s full financial story to induce their business. An experienced tax attorney can often make an educated guess about whether or not you’ll qualify for an offer in compromise, but to do so, they will need to understand your situation in detail. It’s a red flag if someone makes promises or guarantees without details about your situation.
2. Be aware of promises that the process will be fast.
To close the deal quickly, some tax companies may mislead clients about how long the offer in compromise process takes. They tell people what they want to hear and say that they can wrap up the issue in a few weeks or a month. This is not the case.
In reality, obtaining an offer in compromise usually takes about six months or longer. In some cases, you can wrap up the process in four months, but in other cases, it takes over a year. A reputable tax pro should give you honest answers about the timeline and what to expect during the process.
3. Avoid companies without clear billing processes.
The cost of an offer in compromise can vary, and even reputable tax professionals often can’t tell you the cost upfront. They need to take a closer look at your finances and the complexity of the case before they can estimate the cost. However, they should be able to answer questions about their billing processes and practices.
You should avoid companies that can’t explain their prices or demand large upfront fees without any explanation. Instead, look for an offer in compromise attorney with clear billing processes.
4. Don’t work with someone who hides information from the IRS.
When you apply for an offer in compromise, you must give the IRS very detailed information about your finances. The IRS uses this information to determine if you qualify for this program. If the IRS approves your offer and then discovers that you omitted information, the offer will be rescinded, and you will owe the entire tax bill in full. You could even be charged with fraud or evasion.
If you want an offer in compromise, you’ll need to transparently share nearly every detail about your finances with the tax pro helping you. If a tax relief company advises you to hide money or assets from the IRS, don’t follow their advice. Report this behavior to the FTC by calling 877-FTC-HELP, and then, find a reputable offer in compromise attorney to help you.
These tips echo what the FTC recommends. If you have tax problems that you can’t resolve on your own, you should contact an enrolled agent, a CPA, or a tax lawyer. Then, you should have a face-to-face meeting or a zoom meeting, etc. where they explain their billing process and how they can help you.
IRS Offer in Compromise Doubt-as-to-Liability Attorney
There are two main types of offers in compromise. They are called doubt as to collectability and doubt as to liability. Doubt as to collectability is when the IRS reduces your tax bill because the agency doubts that it will be able to collect the full bill. When you apply for an offer in compromise, you essentially try to convince the IRS that your offer is the most they will be able to collect.
Doubt as to liability means there is doubt that you owe the tax. If you apply for an offer in compromise for doubt as to liability, you have to convince the IRS that you don’t owe part or all of the tax. This requires extensive knowledge of tax laws. For doubt as to liability cases, you should always work with an experienced tax attorney.
How Does an Offer in Compromise Lawyer Work?
When you call an offer in compromise lawyer, they will talk with you about your tax situation. They will look closely at your finances to see if you might qualify for this program. They will also gather IRS transcripts to get a sense of your tax history.
“Offer in compromise lawyers”, don’t only help with offer in compromise filings, they generally help with a wide variety of filings depending upon their clients unique financial situation. A good tax lawyer will do a full financial review and compare your situation to the IRS and/or state standards to see what programs you may qualify for. If you do not qualify for an offer in compromise, they can help with the next best alternative which may be a payment plan, IRS hardship, penalty abatement, and other tools they have to address your tax liability.
Alternatives to Offers in Compromise
The reality is that not many people qualify for offer in compromise programs. In 2021, close to 50,000 taxpayers applied for offers in compromise, but the IRS accepted just 15,154 offers. To put these numbers into perspective, over 11 million people owe back taxes to the IRS.
The reason it’s so difficult to qualify for an offer in compromise is that the IRS only accepts offers if they represent the most the agency is likely to be able to collect. If you make an offer and the IRS thinks that you can pay more, the agency will reject your offer.
Reputable tax attorneys understand this, and they aren’t going to have you waste time applying for this program if it’s not right for your situation. Instead, your tax attorney may recommend one of the following tax resolution options:
- IRS Installment Agreement — Make monthly payments on your back taxes.
- IRS Currently Not Collectible program — Prove that you can’t pay so the IRS pauses collection actions on your account.
- IRS Innocent Spouse Relief — Get relief from back taxes due solely to the actions of your current or ex-spouse.
- IRS Penalty Abatement — Request to have penalties removed from your balance.
Dealing with back taxes can be complicated. In some cases, you may qualify for multiple programs. For instance, a tax lawyer may help you apply for penalty abatement and then set you up on a payment plan. When you contact a tax lawyer, they can help you find the best option for your situation.
State Offer in Compromise Lawyers
Many states also have offer in compromise programs, but some states are not willing to reduce tax balances. If you owe state and federal back taxes, you need a tax lawyer who works in your state or represents clients nationwide. Because the rules vary so much from state to state, you should look for a tax lawyer who has experience with the state tax agency that you owe.
Get Help from an Offer in Compromise Lawyer Today
If you’re looking for the best offer in compromise lawyer, contact us today. At The W Tax Group, we employ best in class, experienced tax lawyers, accountants, and enrolled agents. Our team of experienced tax lawyers, accountants, and enrolled agents are honest with our clients and help guide them to the best solution for their situation.
Wondering if you might qualify for an offer in compromise? Curious about how much an offer in compromise attorney costs? Then, contact us today. We can help you deal with the IRS and get rid of your tax problems.