The IRS Offer In Compromise Program, Also Known As OIC
If you cannot pay your tax debt because of hardship, an Offer in Compromise (OIC) can help. This option lets you reduce your debt so it does not hurt your future.
An IRS Offer in Compromise lets you settle your past tax debt for less than what you owe. It may be the right IRS tax solution for you.
The First Step In Settling Any Tax Liability Is To Determine Your Financial Situation And Assess The Ability To Pay.
You do not need a tax attorney to file an IRS offer.
By reviewing all of the options in relation to their individual situations, an experienced tax professional will help taxpayers avoid pitfalls, set up the best collection option with the IRS, and eventually save them a lot of grief and money. Forms used are Form 433-A OIC, 433-B OIC, and 656. The IRS also has a compromise pre qualifier.
If you do not have a economic hardship, installment payments may have to be set up to settle the taxes owed.
An IRS OIC Is A Proposal For Paying Tax Debt Based On The Amount Calculated As The Reasonable Collection Potential Or RCP. The Offer Cannot Be Unfair And Inequitable To Either Party. A settlement allows you to settle your tax debt for less than the full amount you owe.
It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship.
The IRS considers your unique set of facts and circumstances:
The IRS generally approves an offer when the amount offered represents the most we can expect to collect within a reasonable period of time.
The IRS Offer package is a long and comprehensive plan.
This Involves Disclosing To The IRS Every Aspect Of Your Finances. Therefore, It Is Best To Make Sure You Are A Successful Choice Before Applying For The Program.
An Unsuccessful OIC Will Only Expand The Statutes Of Your Debt Collections.
It Also Gives The IRS Any Bit Of Information They Need To Implement Against Your Collections.
If Your OIC Is Rejected By The IRS, They Now Know More About Your Financial Situation; Including Where Your Money Comes From, Where Your Bank Accounts Are, And What You Own.
If Your OIC Is Refused And The IRS Wants To Levy You, They Know Exactly Where To Go.
How To File An IRS Offer In Compromise
Steps To Submit An Offer To The IRS
The IRS will return any newly filed OIC application if you have not filed all required tax returns and have not made any required estimated tax payments. If you have unfiled tax returns, the IRS will require you to file those before they will consider your OIC application. Additionally, if you have not made any required estimated tax payments, the IRS will also return your OIC application. It’s important to ensure that you are in compliance with all tax filing and payment requirements before requesting an OIC.
Any application fee included with the OIC will also be returned. Any initial payment required with the returned application will be applied to reduce your balance due.
This policy does not apply to current year tax returns if there is a valid extension on file. You are not eligible if you are in an open bankruptcy proceeding. In addition, individuals who are under audit by the IRS are also not eligible for this policy. It is important to note that this policy is based on IRS guidelines and regulations, so it is essential to have a thorough understanding of IRS statute when determining eligibility. It is recommended to consult with a tax professional or legal advisor to ensure compliance with all IRS rules and requirements before applying for any tax relief programs. Understanding IRS statute is crucial in navigating the complexities of tax law and ensuring full compliance with all regulations.
Use the Pre-Qualifier Tool to confirm your eligibility and prepare a preliminary proposal.
You’ll find step-by-step instructions and all the forms for submitting an offer in the Booklet, Form 656-B PDF. Your completed offer package will include:
Your initial payment will vary based on your offer and the payment option you choose:
If you meet the Low Income Certification guidelines, you do not have to send the application fee or the initial payment and you will not need to make monthly installments during the evaluation of your offer. See your application package for details.
Understand The IRS Offer In Compromise Process
You Can Rest Assured
What are your options if IRS dismisses your OIC?
If The IRS Refuses Your OFFER IN COMPROMISE, They Now Know More About Your Financial Situation; Namely Where Your Money Comes From, Where Your Bank Accounts Are, And What You Own.
If Your OIC Is Refused And The IRS Wants To Levy You, They Know Exactly Where To Go. Offer In Compromise, A Carefully And Professionally Curated Offer Will Give You The Best Chance To Settle For Dollar Pennies!
Understanding the Offer in Compromise Program
An OIC Is A Type Of Out-Of-Court Agreement Between A Taxpayer And The IRS. OICs Are Designed To Negotiate A Resolution To The Taxpayer’s Liability And Place Collection Efforts On Hold. Do Keep In Mind That The IRS Has The Power To Compromise Or Settle Federal Tax Liabilities By Accepting Less Than Full Payment, Provided The Taxpayer Can Provide Valid Reasons.
Is Tax Debt Weighing You Down? Here’s How an Offer in Compromise IRS (OIC) Could Be Your Solution
Tackling tax debt can feel overwhelming, but the IRS’s Offer in Compromise (OIC) program might be the lifeline you need. Here’s what you gain with an OIC:
Remember, the goal here is simple: achieve collection of what’s collectible early on and with the least cost – for both you and the government.
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