Filing an offer in compromise will stop all enforced collection activity while it is processed. So if you or your business qualify to file an offer in compromise, doing so is the best strategy.

To get the Revenue Service to process an offer in compromise, a taxpayer must offer at least the equity in its assets, which often is a small amount (each assets' fair market value less a 20% offer in compromise discount less the full balance owed to any secured creditor). Fair market value is often pennies on the dollar of an asset's original purchase price. This amount is the asset sheet component to a minimum offer amount. If a taxpayer also has monthly net income, that monthly net income must be multiplied by at least 48. Often taxpayers have little or no monthly net income at the time they file an offer in compromise. This is the income statement component to a minimum offer amount. The sum of the two equals the minimum offer amount.

If an offer in compromise is filed the normal way through the Revenue Service's collection division, the collection division will delay processing the offer for approximately 16 months. After about 12 to 15 months, the collection division will demand that all the financial condition forms be done again which may affect the minimum offer amount. Then, the collection division almost always recommends rejection of the offer which forces the taxpayer to file an administrative appeal. Sadly, it is nearly impossible for taxpayers themselves to get the Revenue Service to accept an offer. By far, the best way to file an offer in compromise is to bypass the collection division by filing a request for a Collection Due Process Hearing. (continued on next page)