Wednesday, June 07, 2006

Offer in compromise - an offer you can't refuse ?

I was really disappointed this week to find out that the IRS is changing the offer in compromise program. First let's discuss below what was really great about this program. An offer in compromise lets a taxpayer who cannot afford to pay all his taxes to make an offer to pay a percentage of what they owe. It is really government acting in a very humane manner. Just like a regular businessman will sometimes make a deal with the customer who has fallen on tough times, this program allows the same thing to happen at the IRS.

Well as of July 16 this program will not be the same anymore. If you want to make an offer in compromise you must first give a down payment of 20%. If the IRS does not accept your offer you don't get the 20% back. I'm not sure why anyone in their right mind would make an offer in that position, knowing that they might show nothing for their efforts but a loss of 20% of what they owe.

Remember the old joke that if pro is the opposite of con then what is the opposite of progress, that's right Congress. I don't know why they would want to fix a program that brings in revenue to make it so flawed that no one would want to use it anymore. When in the past few years many states have gotten bountiful tax revenues by offering amnesty we now find the IRS going in the opposite direction and making it even harder for a taxpayer to clean up his act.

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