Offer in compromise vs. bankruptcy
By Cathy Moran, California Bankruptcy Lawyer on Mar 29, 2008 in California, Chapter 13 Bankruptcy, Featured, Tax Issues
My office has been flooded this week with clients with failed offers in compromise for IRS tax debt. Like most clients, they have been clinging to the hope that there was a solution other than bankruptcy.
The comparison of OIC vs. bankruptcy is neatly laid out in an article by Larry Heinkel in the Florida Bar Journal, subtitled “”why bankruptcy may be better than an OIC.”
The tidbit I found most interesting was that out of the 59,000 offers filed with the IRS in 2006, only 15,000 were accepted. That is a damning statistic when you consider the number of businesses promising the tax indebted relief for “pennies on the dollar”.
It is the rare client whose only debt problem is the IRS. All too often, they have been ignoring the tax debt while paying other, noisier creditors, until the day of reckoning, which is usually a tax levy. Bankruptcy deals with all of the creditors and offers far more comprehensive relief.
More on using Chapter 13 to deal with tax issues.
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