Many taxpayers are interested in the offer in compromise program. It is the one that is advertised constantly by TV tax firms. You are asking the government to take less than the total tax liability. The failure rate for an offer in compromise is nearly 90%. There are a number of reasons why offers are rejected. The applicant makes too much money. The applicant may have equity that could be used to satisfy the debt. The applicant may have filled out the form incorrectly. The applicant maybe frustrated by the analyst who is in charge of approving or rejecting the offer.
Why do I need an attorney? First, an attorney will have experience submitting offers. A good tax attorney can tell you whether you are a good fit for the offer in compromise program, and also have experience submitting successful offers. You ideally want someone who will handle your application from beginning to end. That is why I advise against retaining companies that advertise tax solutions without listing who is working for them and how many years of experience they have. Many offer mills have high turn over and shuffle your file from person to person. In addition the “tax professionals” may have limited experience.
Second, an attorney will be able to not only handle an appeal if necessary but also file a tax court petition. If the offer unit should reject your offer and there are grounds to appeal. Most taxpayers are unfamiliar with the process and will lose on appeal. The advantage of having an attorney handle your appeal is that the attorney will build your record in case a tax court petition needs to be filed.During the appeals process, the appeals officer weighs the risk of litigation as well as the merits of the offer. An attorney will be able to better define the risks of litigation while strengthening your case for court if needed. An enrolled agent or CPA likely will not have had this training. I have found that this is also where TV firms stop services. They will not go to tax court. They may not have anyone capable of litigating your case for you.