So your IRS audit is over and you know how much you must pay the government. Believe it or not, the IRS will overlook up to a certain amount of the monies you owe. In order to be considered for this "discount", you must submit an "Offer in Compromise" (OIC), as it is referred to. The Colorado IRS Form 433A is one of the instruments by which you submit your request.

The Colorado IRS Form 433A, Collection Information Statement for Wage Earners and Self-Employed Individuals, is used by the Internal Revenue Service to "outline additional taxpayer financial information and the ability for the taxpayer to settle tax debt." (www.offerincompromiselawyer.com)

Together with Form 656A you will then submit an "Offer in Compromise", in order for the Internal Revenue Service to consider diminishing the amount of money you owe the government.

Bad things happen to good people. You may have lost your job, undergone a long illness which left you with only very expensive medical bills or a natural disaster may have occurred where you live and you lost everything you own. Naturally, circumstances such as these would place you in a precarious financial situation where you may not be able to pay your taxes. These are sufficient reasons for you to file a Colorado IRS Form 433A, to request the Internal Revenue Service to consider you eligible for a Hardship Agreement.

"If approved, it stops all collection activity. This can prevent wage garnishments, bank account seizures and property liens. The IRS can reexamine your financial situation annually to decide if you still qualify under the hardship law. However, by law, the IRS must collect your unpaid taxes within 10 years. If your bad luck or other qualifying circumstances continue that long, you will no longer owe those taxes." (www.ehow.com)

Another instance in which your Colorado IRS Form 433A will come in handy is when attempting to quality for an "Offer In Compromise". In order for the IRS to consider your request, your Offer In Compromise must meet certain eligibility requirements:

• "Doubt as to Liability- In some cases a Colorado taxpayer will have some question about the liability of the tax debt owed. This condition is not frequently met, but if it is, the Internal Revenue Service may be willing to grant an Offer in Compromise.
• Doubt as to Collectability- The amount of tax debt is not in question, but the Internal Revenue Service does not think they will be able to collect the full amount of federal tax debt owed.
• Effective Tax Administration- Under certain conditions the Internal Revenue Service realizes that collection of federal tax debt may cause "an economic hardship which is inequitable and unfair", if this is the case, they may be willing to agree to an Offer in Compromise. The elderly and disabled most often qualify for an Offer in Compromise under this condition." (www.offerincompromiselawyer.com)

When submitting your Offer In Compromise there is a $150 filing fee. The forms which form part of your request are IRS Form 656, which is the actual Offer in Compromise, along with Colorado IRS Form 433A. "If you are married and live in a community property state, the IRS may request that your Collection Information Statement include data on your spouse -- even if you alone owe the IRS. Take particular care in filling in this form correctly if you are serious about your OIC. The IRS scrutinizes the disclosures you make in this form much more closely when considering an OIC than when you request to pay your taxes with an Installment Agreement." (www.nolo.com)

The IRS will consider special circumstances when deciding about how much money you will pay them. Some of these circumstances include "people with physical or psychological infirmities. In particular, the IRS has always favored offers from people with bleak financial prospects due to advanced age -- over 60 in particular. And the IRS will consider HIV or drug- or alcohol-related problems, as well as a family member's problem if it has a detrimental financial effect on you." (www.nolo.com)

In order for your "special circumstances" to be considered you need to attach a letter to your Colorado IRS Form 433A, explaining such circumstances. You will also need to attach professional documentation such as statements from doctors and copies of medical records confirming your situation.

Naturally, if the Internal Revenue System deems that you do not qualify for an Offer of Compromise your request will be rejected. The most common reason for the IRS's rejection of an Offer in Compromise is the sum offered to them is too low. The Internal Revenue Service must then send you a letter explaining why your request was rejected. In this same notification the IRS will denote the amount of money that office deems is a fair amount for you to pay.

Once you receive your rejection notification in the mail you have 30 days in which to appeal such decision.