When you owe a tax debt to the IRS, Offers in Compromise (OIC) are generally only considered if your financial situation is such that it appears unlikely that the IRS would ever be able to collect this entire tax bill from you within the allowed 10 year period of time that they have to pursue collections. So if you currently have enough assets and income to cover the taxes you owe, it would not be likely that an OIC would be accepted.
As far as interest and penalties that have been assessed to your tax bill -- the interest is something the IRS will never waive, however, you can in some cases have part or all of the penalties waived, if you can show that there was a reasonable cause for your failure to pay these taxes when they were due. Requesting and abatement of penalties is something that you can do on your own by writing a letter to the IRS Service Center where you would normally file your return to the attention of the Penalty Abatement Coordinator.
If you feel as though you need the help of someone who is accustomed to dealing with the IRS on these issues, then my suggestion would be to consult with an Enrolled Agent. An EA is not a tax attorney, but they are licensed by the IRS to represent taxpayers on all tax related issues. They are extremely knowledgeable and would be able to give you guidance on our particular situation as to what you might reasonably expect as an outcome and what your options might be. The services of an EA will likely be much less costly than those of a tax attorney.
I am giving you a link to the Nat'l Assoc of Enrolled Agents website. There is a link on the left which you can select to find an EA in your area. My suggestion would be to call an EA in your local
area and explain the situation you have, and let him tell you what services he could provide. Be sure to get a fee quote from him before engaging his services.http://www.naea.org/MemberPortal/
I think that an EA can offer you the same services as a tax attorney at a much lower cost, so this would be my recommendation if you are seeking help from an outside source.
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Thank you carolyn and let me know if you have more questions. I am happy to help you with whatever I can.