I have had luck with the offer in compromise program. I owed about $13k in federal taxes. I did the calculator tool and found out that I would most likely be approved. So I filled out the paperwork and and mailed it in.. (this was August 2014). I got a letter saying they've received it and I would hear back by 12/31. In early December I received a letter saying they are still reviewing so I should hear something by 3/31. They went back and adjusted 1 of my recent years which tacked on another $3k (old debt that was apparently written off) and said I either had to accept it to keep going or challenge it, send in proof of that I should be responsible for it which would put my OIC on hold until that issue was resolved. I accepted it...By upping the balance it only helped me. In June I received a letter saying it was denied because of the amount I offered (the worksheet said I should offer $0 but I still offered something because I rightfully owed them money). They countered however. Said that if I offered $1800, they would accept (I had just started a new job and had $1800 in 401k and they considered that a liquid asset and determined that I could use that to pay them the debt). I agreed to the offer and they still allowed me to pay them in 5 installments. They will keep whatever refund I would have earned in 2016 for the 2015 tax year but after that I am free and clear. It can be a lengthy process but as long as they are in processing, they will not take action against you (i.e-garnishments, levies, payment plans). I know $13k ($16k) isnt anywhere near $40k but it;s still worth a shot. You dont have anything to lose by trying! Good Luck! oh yea, my last payment will be made by december 31!
