Offer in Compromise Not Available after Tax Evasion Conviction

The Offer In Compromise program is available to anyone who owes back taxes, no matter how they arose, with one exception. If you are found guilty of fraudulently evading tax, you face criminal penalties and cannot do an Offer to pay restitution. I mention this because most schemes that promise to make you money “Tax free” are fraudulent and are eventually shut down. The participants in the scheme, even if they participate and do not know it is fraudulent, can face criminal penalties. Therefore I would examine any program that promises tax free money very carefully. There are many legal ways to avoid, i.e. reduce, taxes and also ways to delay taxes. IRA’s and 401K’s are two examples. The idea is that one puts money in these while young in a higher tax bracket and does not pay taxes on the money at that time. Then after he is 65 or older, he takes the money out and pays the taxes at his then tax rate, which is assumed to be lower. Thus avoidance of tax through recognized programs is legal but evasion of tax is illegal. The IRS has just begun a new initiative with most of the states to cooperate in sharing information about individuals engaging in tax avoidance transactions. South Carolina is participating in this initiative. If one does owe delinquent taxes, the availability of an Offer in Compromise will be based on whether he qualifies financially and otherwise, so his eligibility cannot be determined until the time to make the Offer.